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Russian Consumer-Led Expansion to Slow in 2013, BNP Says

Russian consumer spending will continue to carry economic growth this year even as slower increases in incomes and borrowing damp household demand, according to BNP Paribas SA.

“We see private consumption remaining the primary driver of GDP growth in 2013 and beyond,” Julia Tsepliaeva and Kirill Mavrin, economists at BNP Paribas, said in a research note e-mailed today. “This is particularly important amid a dramatic slowdown in investment demand and the resulting unavoidable economic deceleration.”

Russia, which raised military and police salaries by 100 percent to 200 percent ahead of last year’s presidential election won by Vladimir Putin, will see slower increases in wages this year, curbing household spending, the economists said. Public-sector workers will see 10 percent to 15 percent raises, while pensions may rise 10.5 percent, slowing the growth of real wages to 4 percent to 4.5 percent, according to BNP.

“We welcome this slowdown to a rate closer to Russia’s labor productivity growth rate,” the analysts said. “This makes the pace of real wage growth more sustainable in the medium term.”

The Micex Consumer Goods and Services Index of 11 stocks advanced 27 percent last year, while the broader Micex Index gained 5.2 percent, according to data compiled by Bloomberg.

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