Friday, November 16, 2012

16/11/2012: Russian economy Q3 2012

In contrast with contraction (-0.1%) in the Euro area (see my note on Dutch woes here), Russian economy grew 2.9% in Q3 2012 - slightly ahead of consensus expectations (2.8%). However, Q3 growth marked the slowest pace of expansion since Q1 2010. Main drivers of growth performance were:

  • Private consumption remaining on slower growth path
  • Declining growth rate in investment (on monthly basis, September data showed surprise decline of 1.3% in overall investment - the first contraction since Q1 2010)
  • Industrial production increased 2% y/y in September, almost unchanged from August 2.1% rise. However strong PMI data for October should provide some boost.
  • Weaker demand for agricultural commodities was a drag on exports, alongside shallower demand for extraction sectors exports.
The net effect is that slowdown in consumer demand growth and capex are likely to adversely impact Irish exports to Russia. However, I don't foresee significant or prolonged effect here. More on bilateral trade flows to follow in subsequent analysis, so stay tuned.


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