Russia imports likely to fall in 2015-16

Due to demand-side shock, the growth in Russian private consumption continued to be in negative territory throughout H1 15. Households' access to loans has become very limited and is curbed by high interest rates. In addition to high inflation, the devalued rouble and wage freezes are also hurting consumers' purchasing power by raising spending on food items and causing consumption of services to seize up.

Government support started in April 2015 and we expect it to continue throughout 2015. The unemployment rate stayed at its post-Soviet lows throughout 2014, reaching 5.4% in June, although rising slightly in early 2015. 

"We expect service sector jobs to be hit the most. As the fall in the rouble's REER since 2014 and the devalued currency due to Russia's counter-sanctions have made imports less affordable, we expect the shift in  omestic demand towards local production to continue", according to Danske Bank.

Currently, the market does not expect a similar rebound in the oil price as happened after 2009. Therefore, the share of imported goods in the consumer basket is likely to shrink further in 2015-16, said Danske Bank in a report on Thursday.