Russian Incomes to Investment Shrank in March Amid Slump

Russia’s incomes unexpectedly fell and investment contracted faster than estimated, supporting concerns that the economy is heading toward a recession.

Real disposable incomes fell 6.8 percent in March from a year earlier after a revised 0.6 percent increase in February, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 11 economists surveyed by Bloomberg was for no change. Fixed-capital investment fell 4.3 percent last month after declining 3.5 percent in February. That’s below the median estimate of 15 economists in another poll for a drop of 3 percent.

The annexation of Crimea from Ukraine last month prompted the U.S. and the European Union to introduce sanctions against Russia, threatening to tip the $2 trillion economy into recession. The worst standoff against the U.S. and its allies since the Cold War intensified capital flight and triggered a selloff in the Russian currency and stocks.

“We have already seen that the ruble depreciated quite significantly and obviously it is going to affect purchasing power of households and real income,” Juri Kren, an economist at IdeaGlobal in London, said by phone before the release.

The ruble has lost more than 8 percent against the dollar this year, the second-worst performance among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso. The dollar-denominated RTS Index has dropped 20 percent, compared with a 0.4 percent advance for the MSCI Emerging Markets Index.

Sales Surprise

Retail sales grew 4 percent from a year earlier after a revised increase of 3.9 percent in February, the statistics service said. That exceeded the 3.3 percent median estimate of 15 economists in a Bloomberg survey.

Wages adjusted for inflation climbed 3.1 percent in March from a year earlier, missing the 3.6 percent median estimate. Unemployment declined to 5.4 percent after 5.6 percent in February, above the median estimate estimate of 5.7 percent.

Gross domestic product grew an estimated 0.8 percent in the first quarter, Economy Minister Alexei Ulyukayev said yesterday in Moscow. Expansion may be below 0.5 or as little as zero this year, Finance Minister Anton Siluanov said April 15.

GDP rose 1.3 percent last year, the slowest pace since a 2009 recession.

“Currently, we can see that short-term effects are playing out,” with a weaker ruble forcing consumers to increase spending out of fear for their savings, Alexander Morozov, a Moscow-based economist at HSBC, said in a phone interview before the release. “Probably, the effect of rushed purchases is carried over into March.”

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