This year, however, growth is expected to have softened in the first quarter. A hike in the VAT in January likely weighing on consumer spending and stoked price pressures in the first few months of the year. Retail sales growth recorded one of the softest readings seen in the past year-and-a-half in February, although picked up from January’s low nonetheless. Meanwhile, data from the external sector has also been weak, with exports contracting in January for the first time since October 2016. A combination of a warmer winter in Europe and weak demand from CIS states likely drove the reading, while other data regarding the important energy sector has been more positive. Oil prices increased in January and February, while production was above its output cut commitments agreed with OPEC.
Russia Economic Growth
Growth is set to decelerate this year as the higher VAT eats into consumer spending and the OPEC+ production cuts limit exports. Additional U.S. sanctions, volatile commodity prices and slowing global growth continue to pose risks to the economy, although prudent fiscal policy has helped bolster buffers. FocusEconomics panelists see growth at 1.4% in 2019, which is unchanged from last month’s forecast. In 2020, GDP is seen increasing 1.7%.