Economic growth to accelerate in the second half of 2019

Russian economic growth shows signs of a short-term slowdown caused by external and internal temporary factors. However, as soon as the second half of the year, economic growth paces will accelerate to the potential level. This is the conclusion made by the authors of the latest issue of the Talking Trends, the Bank of Russia’s Research and Forecasting Department bulletin.

Annual inflation has temporarily risen to 5.2% by March, largely on the back of one-off factors. The VAT continued to have a moderate influence on consumer price growth. At the same time, bulletin authors note that a tangible effect also came from temporary factors constraining price growth, such as ruble appreciation, stabilisation of motor fuel prices, and the drop in certain food prices.

Short-term negative factors, which include the global economic slowdown, the VAT hike and inflation acceleration early in the year, are likely to constrain Russia’s economic growth until mid-2019. The authors believe that in the second half of 2019, the fading of negative factors coupled with the revival in budget expenditures will accelerate economic growth unless new negative developments in external economic conditions emerge.

The views and recommendations expressed in the bulletin do not necessarily reflect the official position of the Bank of Russia.