Cbank sees demand spurring Russia’s economic growth in 2017

MOSCOW, Feb 7 (PRIME) -- A higher aggregate demand will help grow the Russian economy, which contracted 0.2% in 2016, although some signs of growth were noticeable already in October-December in seasonally adjusted terms, the central bank said in a forecast on Tuesday.

The restoration of economic activity became stable in 2016, but the key indicators still showed mixed dynamics. Industrial output rose, supported by external demand and import substitution, investment activity demonstrated a gradual recovery. However, consumer demand shank following a slight advance in July-September, the bank said.

The central bank also projects that companies of the producing sector will increase output.

“Surveys have shown a better producers’ mood. The industrial optimism index, which takes into consideration output plans, demand and employment forecasts, hit a five-year high in January,” it said.

It added that a change in the companies’ inventories structure with a rising share of raw materials is another sign of their plans to expand production.

Higher economic activity will result in a gradual increase in salaries and retirement pensions and a soaring consumer activity without an additional inflation pressure due to a simultaneous rise in overall supply, the bank said.

The economy has been recovering faster than expected, but the 2017 growth rate will be modest, the central bank said after a board meeting on February 3. The bank projects positive quarterly data in the first quarter of the year.

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