Russia’s GDP: it seems to have its negative trend

GDP growth in the 2nd quarter of 2014 amounted 0.8% that is worse than the expectation of the Ministry of Economic Development and Trade with its trend of 1.1%.

Positive beginning of the year when the Russian economy demonstrated its positive figures against the 1st quarter of the last year has changed with the worsening of major national measures. The high growth rate of the industrial production due to the manufacturing branches in the 1st half of the year did not subscribe the positive speedup trend.

Russian GDP growth by quarter against the relevant period of the last year, %

The negative reversal is occasioned with the related facts. The sufficiently measurable slowdown of the public consumption is being observed that is checked out with trend reduction of the retail turnover from 3.6% in the 1st quarter to 1.8 in the 2nd quarter. The heavy as ever geopolitical environment makes Marquee Investors flesh crawl and the sanctions against Russia restrict the abroad crediting to the range of the largest companies. The economic environment is getting worse.

The retaliation measures that Russia has taken for the import ban of the essential supplies from the countries of EC, USA, Canada, Australia and Norway can give a fillip to the national agricultural industry on a long-term horizon. However, the accelerating inflation that already exceeds all the guidelines of the Government for this year should be expected near the future. The key interest raise to 8% by the Central Bank will lead to the credit tightening as well as damping the low investment activity as it is.

All that is lacking is to hope for the early settlement of the conflict in Ukraine that is hurting not only the economy of Russia, but also other states, primarily the countries of EC.