Bank of Russia expects further growth in investment activity

According to Bank of Russia estimates, annual growth in fixed capital investment stood at roughly 5% in 2017 Q3. As stated in the latest issue of the Bank of Russia’s information and analytical notes ‘Economics: Facts, Assessments, Comments’, in Q4, amid recovery in demand for companies’ output and lending conditions easing, growth in investment activity is expected to continue.

Positive investment dynamics will be supported by the realisation of the federal targeted investment programme. The commentary says that by year-end, growth in fixed capital investment will come to 4-4.5%.

In September, consumer demand was on the rise following an increase in real wages. In view of the decrease in lending and deposit rates and improvements in consumer confidence, households are gradually abandoning the savings behaviour model.

By Bank of Russia estimates, 2017 will see growth in households final consumption expenditure totalling 3-3.5%; growth in gross capital formation will come to 6-7% and will be expected to remain in the upper bound of the forecast interval. According to the Bank of Russia’s forecast, overall economic growth will reach 1.7-2.2% in 2017.

Moderately tight monetary policy will create the necessary conditions for anchoring inflation at about 4% and will not hamper further economic growth. The Bank of Russia’s ongoing transition to neutral monetary policy will be gradual.