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Russian Economy Goes Down
August 20, 2014 00:45


Russian economy continued to drift to zero in July. Investments recovery stopped, and the growth of private consumption was much slower than in the second quarter, according to the fresh portion of macroeconomic statistics from Federal State Statistics Service as of July 2014 and the estimates of independent economists.

The dynamics of domestic demand actually returned to zero in July, which increases the risk of recession in the second half of 2014. The first thing that attracts attention in the macroeconomic report of Federal State Statistics Service as of July is the fall in investments by 2%  at an annual rate after the figure in June showed a plus of 0.5% for the first time since the beginning of the year.

The end of the first half of the year really seemed crucial for the dynamics of capital investments for both analysts and officials. According to the results of the second quarter the data of Federal State Statistics Service really showed that the increase in investments has begun in many industries.

The exceptions were only extractive industries (excluding oil and gas), metallurgy, chemical industry, leather and footwear manufacturing and public administration. In July the investments stopped their recovery, according to Centre for Macroeconomic Analysis and Short-Term Forecast.

According to the  analysts of the Centre, “after stabilization at the end of the first - the beginning of the second quarter the supply of investment goods started to shrink fast enough in the first two months of the summer” - by 1.3% per month, seasonally adjusted. Reduction in supply is due to the rather sharp decline in imports of capital equipment (minus 2.5% per month for June - July) and building materials (minus 0.7%), although the production of domestic equipment remains stable.

The fact that the reduction had something to do with the expectations of the sanctions was not confirmed by Vladimir Salnikov from CMASF. Aleksandr Morozov from HSBC supports him, noting that the effect of sanctions in July (both external and internal) is still not obvious in other indicators.

Author: Anna Dorozhkina

Tags: Russian economy     

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