Hot topics | Coronavirus pandemic

Russia's GDP Fell By 8.5% In Q2 2020

Russia's GDP Fell By 8.5% In Q2 2020

The decline in Russia's GDP in the "quarantine" second quarter, when many industries were closed due to restrictive measures in connection with the coronavirus epidemic, was comparable to the deepest quarterly falls in the crises of 1998 and 2009, but still did not exceed them, without confirming the most pessimistic expectations of the authorities.

As Rosstat reported on Tuesday, the decline in Russia's GDP in the second quarter, according to preliminary estimates, was 8.5% year-on-year after an increase of 1.6% in the first quarter.

The data of Rosstat was optimistic calculations of the Ministry, which estimated GDP declined in the second quarter of 9.6% and better than expectations, the Central Bank (decrease by 9-10%).

"Quarantine" the district is not exceeded and the deep fall in the last quarter-century: in 1998, the most significant decline was recorded in the fourth quarter by 9.1%, and in the period of the global financial crisis, a decade later peak was the second quarter of 2009 - a minus of 11.2%.

Rosstat noted that the decline in the growth rate of value-added was observed in all sectors of the economy except for agriculture. The maximum drop was observed in the commodity sector, retail trade, passenger transport, as well as in sectors related to the provision of services to the population. Minimum - in manufacturing, construction, wholesale trade, and cargo transportation, as well as in the provision of electricity, gas, and steam, and air conditioning.

According to Rosstat, in the second quarter, production growth in agriculture amounted to 3.1%, in the industrial sector, production decreased by 8.5% (while the decline in mineral production under restrictions under the new OPEC+ deal was 10.3%), retail trade decreased by 16.6%, passenger turnover - by 79.0%, the catering sector - by 48.9%, the volume of paid services to the population - by 37.2%.

Rosstat will provide more detailed data on GDP for the second quarter on September 9.

The Ministry of economic development in the June version of the forecast expected a fall in Russia's GDP in 2020 by 4.8%, growth in 2021 by 3.2%, in 2022-by 2.9%, in 2023-by 3.1%.

The Central Bank some time ago narrowed the range of forecasts for a fall in Russia's GDP in 2020 to 4.5-5.5% from 4-6% in the previous version. In 2021, the Central Bank now expects the economy to rebound by 3.5-4.5% instead of the previous forecast of growth of 2.8-4.8%, in 2022, it forecasts growth of 2.5-3.5% instead of the previous interval of 1.5-3.5%.

The consensus forecast compiled by Interfax based on a survey of analysts from leading investment companies, banks, and think tanks at the end of July for GDP dynamics for 2020 was slightly better than official expectations and assumed a decline of 4.2% with subsequent growth of 3.1% in 2021.