Consumer demand bolsters economy in March
In March, economic activity continued to grow. Consumer demand expanded, as evidenced by growth in retail turnover, output of durable goods and consumer lending. This topic is covered in the current issue of commentary ‘Economy: Facts, Assessments and Comments’.
Seasonally adjusted retail trade turnover resumed growth month-on-month (+0.2% in March compared to February). The output of investment and non-food consumer goods also increased compared to February. The output of pharmaceutical products and various durables, including light vehicles and furniture, continued to grow. In 2019 Q1, households’ propensity to consume picked up, as evidenced by their shrinking deposits and expanding retail lending.
All this reflects the recovery of consumer demand after its slowdown in late 2018 — early 2019. A certain cooling in demand in this period was caused by the VAT increase. According to the Bank of Russia’s earlier observations, the VAT hike will have a slight constraining effect on GDP this year.
The Bank of Russia estimates that annual GDP growth will come in at