Economic growth in 2017 may exceed expectations

Growth rates of output of goods and services in 2017 Q2 outperformed the Bank of Russia’s projections. On an annual basis, 2017 GDP may also come in stronger than previously expected, according to the August issue of information and analytical commentary ‘The economy: facts, assessments and commentary.

Q2 GDP growth accelerated on the back of both expanding investment / consumer demand and a recovery in working capital reserves. Major investment projects were behind a material rise in construction volumes. Companies increased procurements of engineering products as well as inventories, anticipating a further expansion in demand. Households are showing increased demand for durable products including cars.

The Bank of Russia expects economic recovery to continue into Q3 and Q4, albeit at slower rates against Q2. Annualised GDP growth rates in the third quarter are set to exceed forecasts at 1.7-2.2%, which comes as a result of dynamic expansion in gross accumulation.

The updated 2017 GDP forecast with a component breakdown is due to be published in the September issue of the Monetary Policy Report.