Russian Fourth-Quarter Growth Unexpectedly Quickens on Exports

Russia’s economic expansion unexpectedly accelerated in the fourth quarter, driven by exports, before tension over Ukraine escalated, prompting the U.S. and its allies to impose sanctions against the country.

Gross domestic product advanced 2 percent in October-December from the same period a year earlier, compared with a revised 1.3 percent in the third quarter, the Federal Statistics Service in Moscow said in an e-mail today. The median estimate of 8 economists in Bloomberg survey was 1.3 percent.

“There shouldn’t be much optimism as export dynamics may slow down, and the only hope will be that weak domestic demand will still be compensated by weak imports,” Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said in an e-mail.

Russia’s worst standoff since the Cold War against the U.S. and European Union over Ukraine threatens to tip the economy into recession. Even before the conflict in Crimea, Russia’s $2 trillion economy grew 1.3 percent last year, the slowest pace in four years as domestic consumption failed to make up for sagging investment.

President Vladimir Putin’s move to annex the Black Sea peninsula in March prompted the U.S. and EU to impose some sanctions on individuals, while the Group of Seven industrialized nations threatened Russia with economic sanctions.

“Obviously, we see that the risk of instability, the risk of uncertainty rose,” Finance Minister Anton Siluanov said today at a conference in Moscow. “Such nervousness appeared around the Russian economy on sanctions, on their possible widening.”

GDP Outlook

GDP will expand 1.2 percent in 2014, according to the median estimate of 37 economists in a Bloomberg survey. The probability of recession in the next 12 months is 45 percent, the highest since Bloomberg started to track the measure in June 2012, according to the median estimate of 11 economists.

The economy may stagnate at rates below 1 percent and contract if capital outflows reach $150 billion, Economy Minister Alexei Ulyukayev said last week.

Exports increased by 5.6 percent in the last three months of 2013 from a year earlier, while imports fell 0.1 percent, according to the statistics office.

The ruble has weakened 6.3 percent against the dollar this year, the second-worst performance among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso. It strengthened less than 0.1 percent to 35.0935 per dollar as of 6 p.m. in Moscow.

The Federal Statistics Service also revised expansion in the first quarter to 0.8 percent from 1.6 percent and to 1 percent from 1.2 percent in the second quarter.

While the government is discussing measures to stimulate domestic consumption, the Finance Ministry is resisting calls to increase public spending, Siluanov said.

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