Russia Economic Growth Positive

Russia’s macro statistics in January demonstrated overall positive dynamics, which confirms the continuation of economic recovery.

At the end of 2016, the State Statistics Service of Russia modified its methodology for assessing industrial production. As a result, maximum annual growth was recorded in the industry in November last year. However, the service decided it was not enough, and already at the beginning of this year, it has repeatedly modified the methodology, recalculating all of last year’s indicators, Seeking Alpha reported.

According to new data, the decrease in Russian industrial production in 2015 no longer seems such a disaster as before. And since February 2016, the industry growth rate is no longer in the negative zone.

However, the Russian Statistics Service changed the calculation methodology twice over less than half a year, and the growth rate of the Russian industry is getting better and better after every change, which raises some suspicions.

In January, the seasonally adjusted Markit Russia Manufacturing PMI Index hit a 70-month high of 54.7. Markit research also indicated maximum employment growth in the industry for almost six years. More than that, Russian goods producers registered a further accumulation of backlogs of work.

In January, the services sector in Russia experienced increasing backlogs, and employment growth was the highest over 41 months. The Markit Russia Services Business Activity Index increased, hitting an eight-and-a-half year high of 58.4.

The rate of construction in the Russian Federation in January remained negative just like a month earlier. However, construction usually responds to positive developments in the economy with delay. A positive growth in this industry should be expected no sooner than in the middle of the year.

The growth rate of both nominal and real wages in Russia has stabilized, showing steady growth over the past four months. Steady decline in inflation played a significant role in improving data indicators. According to the central bank, inflation in Russia amounted to 5% in January, and already by the end of this year it may reduce to the level of 4%.

In January, the real disposable income of citizens increased by 8.1% year-on-year, demonstrating growth for the first time since December 2015. The fact that this indicator has moved to the positive zone is a necessary precondition for revival in domestic demand.

In general, the economy is reviving, and it is difficult to argue with that.