Russia GDP improves in Q3

Russia GDP improved to -4.1% y/y (NSA) from -4.6% in Q2 (Figure 1). This was better than the consensus forecasts (-4.4% y/y). This is an advanced release as the preliminary GDP, along with the full breakdown of the components, will be published in December.

Economist's estimate the implied q/q reading is +0.1% (SA), a slight improvement. Thus, if sustained in Q4, this could mark the end of the recession. However, there is a possibility that Q4 real GDP could resume its fall, extending the recession for another quarter. The monthly evidence is mixed. The production data are improving with an upturn in manufacturing PMI, IP and investment.

Consumption indicators remain weak with retail sales, real wages and consumer credit still declining without signs of reversal yet. The other negative factor is the recent decline in global oil prices. This is likely to precipitate further declines in export revenues and keep imports weak.

"We retain our improved forecast for 0% growth under the expectation that global oil prices will reverse and start to increase in 2016 and increase further in 2017. The composition of GDP and the SA component breakdown to be released on 10 December will provide additional insights that could cause us to revise our growth forecasts", says Barclays.