Rebound in investment and consumption set to boost economic growth

Both consumer and investment demand are expected to recover in the second quarter of 2017. The Bank of Russia estimates that as a result GDP growth, adjusted for seasonality and calendar effects, will be similar to growth in the first quarter and total 0.3-0.5% QoQ, as noted in the April issue of the informational and analytical commentary ‘Economy: Facts, Estimates and Comments’.

According to the Bank of Russia’s estimates fixed capital investment increased by 1.5-2.0% in the first quarter, as compared with the same period of the previous year. Investment activity was boosted by stable prices for imported equipment, lower rates on loans, higher financial stability of organisations and improvement in producers’ sentiment amid expected recovery in demand for companies’ products.

Consumer demand indicators continued to recover. The Bank of Russia estimates that household final consumption grew in the first quarter, as compared with the previous period (seasonally adjusted), and almost reached the level of 2016 Q1 (adjusted for calendar effects).

Under these conditions the output of consumer products has increased. The light industry has demonstrated the most pronounced rebound in production activity. The growing output of food products can likely be attributed in part to external demand.