The Russian economic statistics agency, Rosstat, released figures today showing the Russian economy grew at the highest rate in 6 years in 2018, at 2.3%, well above estimates of 1.8-2.0%.
As can be seen from Rosstat’s data, GDP growth in the year 2018, according to the first assessment, amounted to 2.3%, and this record with the year 2012, when the economy grew by 3.7%. In subsequent years, the rate of growth of the economy slowed down to 1.8 per cent — in the year 2013, 2014 year growth amounted to just 0.7%. According to the results of year 2015 fall in GDP was recorded on the 2.5%. In 2016 and 2017 respectively increased by 0.3% and 1.6% respectively, wrote Russian state-run news agency Kommersant.
At the end of January, the Ministry of economy has dramatically improved the estimate of the growth of GDP in 2018 year with projected 1.8% to 2%. This happened largely due to an unexpected recovery in the construction industry. The Ministry estimated growth suddenly construction in 2018 year 5.3% (withm. “Ъ” from 28 January). The Federal assessment, value added in construction in 2018 year actually grew, but not as much — at 4.7%. Big growth was observed only in financial and insurance activities (6.3%), a marked increase was recorded on part of the hotels and catering (6.1%) and in mining growth amounted to 3.8%, public administration and ensuring military security and socobespechenii-3.5%. The largest drop in the year 2018 has been noted in the field of agriculture, forestry, hunting, fisheries and aquaculture (-2%), activities of households as employers (-2%), Kommersant added.
Economists have questioned whether the pace of growth is sustainable and how much of it was artificially boosted by one-off factors such as the start of Novatek PJSC’s $27-billion Yamal LNG project. The 2018 football World Cup also appeared to provide a boost to the restaurant and hotels sector, which expanded 6.1 percent. Very little of the impact is filtering through to consumers, who are struggling amid stagnant incomes and rising inflation, reported Bloomberg.
“We can for sure pretend that this growth is good, but, in fact, we need faster growth, especially after several years of recession,” said Anton Tabakh, the chief economist at Moscow-based credit assessor RusRatings. “It’s obvious that the consumer isn’t feeling much benefit,” added Bloomberg.
The Russian consumer has been feeling the pain of a slow-growth economy and flat wage growth since the recession began in 2014 after the annexation of Crimea and the collapse in global oil prices. Russia is still dependent on hydrocarbon production for federal revenues and remains an oligarchy, where powerful interests control the means of production.
The average wage in Moscow for the middle class is $500-$1000.