Investment and consumer demand continue to recover

Economic recovery continued in August 2017, supported by higher investment and consumer demand, according to the new issue of ‘Economy: facts, assessments and commentary’, a regular BoR information and analytical commentary.

A number of indicators suggest growth in investment is ongoing, including expansion in both outputs and imports of machinery and equipment, as well as construction. Estimates suggest that 2017 Q3 fixed capital investment is set to rise 4-5% in annual terms, which is in line with the Bank of Russia’s expectations.

As real wages were expanding, the rebound in consumer demand continued.  Households showed increased demand for both food and non-food products, a sign that consumer activity may be increasingly sustainable.  Estimates further show that in the third quarter of 2017 households’ final consumption expenditure was 3-4% up on the same period last year, consistent with the BoR forecast.

At the same time, annualised paces of economic growth in the third quarter are estimated to be somewhat lower than in the second quarter at 1.7-2.2%.