Investments grow as demand is set to recover

The Bank of Russia estimates that fixed capital investment grew 1-3% in 2017 Q1 as compared with the same period of the previous year, the March issue of the informational and analytical commentary ‘Economy: Facts, Estimates and Comments’ notes.

The upturn in investment activity is largely due to the expected recovery in demand, decrease in macroeconomic uncertainty and increasing affordability of investment imports on the back of the strengthening of the ruble.

Production activity continued to recover. According to the Bank of Russia’s estimates, industrial production grew 1.0-1.5% YoY in February (adjusted to account for calendar factor). The Bank of Russia expects that industrial production will continue to grow in March.

Real wages grew as inflation stayed low and production growth was recovering. At the same time, the ongoing revival in consumer activity is constrained by households’ propensity to save. The Bank of Russia expects that final consumption expenditure of households will grow in 2017 Q1 as compared with the previous quarter (seasonally adjusted).