(Bloomberg) -- Russia is loosening the financial reins a bit after years of austerity, raising hopes growth could soon pick up even as the global outlook dims.
Data due on Thursday are expected to show an increase in real-wage and retail-sales growth in September, and central bank plans for faster monetary easing could give an additional boost. Funding is accelerating on a $400 billion multi-year state spending plan before the end of the year.
“We see an improvement in the trend,” said Anton Stroutchenevski, chief economist at Sberbank CIB. “The increase in spending should accelerate growth in the second half.”
Years of ultra-tight monetary and fiscal policy succeeded in limiting the damage from sanctions and slumping oil prices but also kept growth in the doldrums. But with the Kremlin under rising pressure to deliver on promises of higher living standards, the government is boosting spending and the central bank has accelerated interest-rate cuts.
The cautious largesse isn’t expected to delivery more than a few tenths of a percentage point of growth, but that could be enough to offset some of the weakness from the global trade war and other headwinds. Central Bank governor Elvira Nabiullina has warned that growth will be limited without structural reforms
What Our Economists Say:
“Modest improvement in retail spending is likely, especially with inflation slowing and wage growth perking up. Mild stimulus should see the expansion gather pace, even as the external outlook darkens.”
- Scott Johnson, economist, Bloomberg Economics
The International Monetary Fund made a fifth-straight cut to its 2019 global growth forecast this week, citing a broad deceleration across the world’s largest economies amid growing trade tensions.
Russia’s economy will probably still only grow by about 1% this year, according to the central bank, below the government’s 1.3% estimate and the weakest since 2016.
Data due later on Thursday could show an acceleration in real wage growth to 3.4% in September from last year, the strongest reading in more than a year, according the majority of forecasts in a Bloomberg survey. Retail sales growth is seen at 1%.
“Private consumption is getting a boost from real wages growth,” said Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki. “There will be a significant upward change in consumption next year.”
To contact the reporter on this story: Anya Andrianova in Moscow at aandrianova@bloomberg.net
To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Natasha Doff
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