Russia: GDP growth slows in 3Q17 - ING

Russia’s GDP growth slowed in 3Q17 to 1.8% from a solid 2.5% in 2Q17, fully in line with ING’s forecast of 1.7% in 2017 and will have no major effects on the CBR policy outlook, for now, according to Dmitry Polevoy, Chief Economist at ING.

Key Quotes

“There was no breakdown at this stage. The growth slowdown bodes well, with some stabilisation in major leading indicators and no signs of visible strengthening of key components of domestic demand. In 2Q17 c.2ppt of the 2.5% came from inventories with “core” growth looking much weaker. This has probably played its role in 3Q17, when companies adjusted their inventories to slightly more realistic expectations.”

“Overall, the growth pace is still in line with CBR expectations of growth staying at 1.5- 2.0% in 2017. Hence, unless we see mounting downside risks to this forecast in 4Q17, the released GDP print shouldn’t be a game-changer for the CBR policy outlook. We still see, at least, a 25bp rate cut in Dec-17 and an extra 100bp over the course of 2018.”