RUB weakness may hit Russia’s Q4 GDP growth

Russia's real sector data for October showed mix result. Industrial production data has improved but consumer data deteriorated further.Russia's industrial production is moving in an upward trend for five consecutive months as it increased to -3.4% y/y from -5.4% y/y in May. In seasonally adjusted terms, the industrial output is now stable. Likewise, manufacturing PMI has inched up to the neutral "50", indicating no further falls, but not sign of increasing.

A solid improvement is noticed in investment as it rose to -5.2% y/y in October from a low of -8.5% in indicators, in contrast, indicate further fall in consumer demand. Household consumption further reduced, as a result of fall in global oil prices and RUB weaknesses. 

"We think lower oil prices and RUB weakness will push real GDP lower in Q4 by about -0.8%. However, this still leads to slightly better growth in 2015 of -3.7%, compared with our previous forecast of -4.0%. We have retained our growth forecasts for 2016 at 0.0% and for 2017 at 1.9% based on our commodity team's forecast of rising oil prices due to expected declines in excess supply", estimates Barclays.