Russian Retail-Sales Growth Unexpectedly Slowed to 4.1%

Russian consumer spending grew slower than economists estimated, adding to evidence the economy of the world’s biggest energy exporter is decelerating.

Retail sales grew 4.1 percent in April from a year earlier, down from 4.4 percent in March, the Federal Statistics service said today in an e-mailed statement. That missed the median estimate of 18 economists for a 4.5 percent increase. Unemployment fell for a third month to 5.6 percent from 5.7 percent, missing the 5.5 percent forecast in a separate poll.

A European recession that extended to a record sixth quarter is pushing Russia to become more dependent on domestic demand as weaker growth prospects have been feeding through to industry. Job gains and increasing wages have underpinned consumer spending, which accounts for about half of the economy, benefiting retailers including OAO Magnit (MGNT) and X5 Retail Group (FIVE), the country’s largest grocery chains by revenue.

“The April data might still be on the weaker side,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow and the top forecaster on the country’s retail sales and investment, said by phone before the release. Even so, “consumer demand will likely remain resilient, supported by unemployment being very low.”

Russian stocks have suffered this year, lagging behind emerging-market peers. The Micex Index (INDEXCF) of 50 stocks had its worst drop in more than a year yesterday, taking its 2013 slide to 6.4 percent, compared with a 2.7 percent loss for the MSCI Emerging Markets Index.

Economy Slows

Gross domestic product expanded at the weakest pace in the first quarter since the economy began growing again at the start of 2010. Consumer-price growth accelerated to 7.2 percent in April, more than a percentage point above the central bank’s target range. That has kept policy makers from easing their main lending rates.

GDP grew 2.3 percent in March from a year earlier, the Economy Ministry estimated last month. Expansion in the first quarter was 1.6 percent from a year earlier, according to the statistics service, higher than the ministry’s forecast for a 1.1 percent advance.

The consumer and investment data will be major factors in shaping the Economy Ministry’s estimate for April’s GDP growth, according to Clemens Grafe, chief economist for Russia at Goldman Sachs Group Inc. in Moscow.

Fixed-capital investment fell for a second month to 0.7 percent from a year earlier after shrinking 0.8 percent in March. The median estimate of 16 forecasts was for a 2 percent increase.

“All our current problems happen because of the external situation,” Alexei Devyatov, chief economist at UralSib Financial Corp. in Moscow, said by phone before data release. “A recession in Europe is deeper than expected.”

To contact the reporters on this story: Scott Rose in Moscow at; Olga Tanas in Moscow at

To contact the editor responsible for this story: Balazs Penz at

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