Russian Retail Sales Growth Stalls After Ruble PlungesAnna Andrianova
Russian retail sales growth stagnated after the ruble had its worst month in more than two years and joblessness rose to the highest since April.
Retail sales advanced 1.7 percent from a year earlier in October, the same rate as in September, the Federal Statistics Service in Moscow said today in a statement. Unemployment rose to 5.1 percent from 4.9 percent, matching the median estimate in a Bloomberg survey of 16 economists.
The ruble’s plunge to record lows and inflation at the fastest since July 2011 are eating into consumers’ finances. That’s plaguing domestic demand already burdened by higher interest rates, capital flight and tit-for-tat sanctions over the conflict in neighboring Ukraine.
“We are about to slip into recession,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said by phone before the data release. “The underlying growth drivers like investment and consumer spending are slowing.”
There’s a 70 percent chance of a recession in the next 12 months, according to the median estimate of 27 economists in a Bloomberg Survey, published Oct. 30. The gauge is at the highest since Bloomberg started tracking the measure two years ago.
Fixed-capital investment shrank 2.9 percent after a 2.8 percent decline in September and wages adjusted for inflation increased 0.3 percent. The median estimates of economists surveyed by Bloomberg were for investment to contract 3.5 percent and real wages to drop 0.9 percent.
The central bank cut its forecast for Russia’s economic growth forecast last week after the price of oil, Russia’s main export earner, dropped to a four-year low.
The U.S. and the European Union imposed sanctions against Russia after President Vladimir Putin annexed Crimea from Ukraine in March and a separatist insurrection flared in two regions. That’s stoked capital outflow and undercut the ruble.
The ruble has lost more than 20 percent against the dollar in the past three months, the worst performer among more than 170 world currencies tracked by Bloomberg, while Russians still put faith in their currency.
The economy is set to expand 0.3 percent this year and stagnate in 2015, according to the central bank’s base-case scenario, which assumes oil prices averaging at $95 next year and sanctions remaining in place until the end of 2017.
“One of the most striking aspects of the recent slowdown in the Russian economy is that the previously resilient consumer sector has weakened sharply,” Liza Ermolenko, an economist at London-based Capital Economics Ltd., said in a note. “It is likely to remain extremely weak over the coming years, providing a much smaller prop to growth than it did over the past decade.”