Russia's 2018 GDP mini-surge will not be repeated

Subject

Russia's economic performance.

Significance

The GDP growth figure of 2.3% in 2018 announced by the economic development ministry is modest but still diverges enough from consensus forecasts to raise doubts about its veracity. The explanation seems to lie in the inclusion of previously unrecorded Arctic construction, plus high oil and gas production, and strong financial-sector activity, albeit the result of borrowing by hard-pressed consumers.

Impacts

• An unexpectedly strong start to the year for oil prices will support economic activity in Russia.
• Global oil markets are currently more bullish than bearish thanks to fears about supply from Venezuela and Iran.
• Russia's state reserves exceed sovereign and private debt together, providing a cushion against external shocks.
• The nature and scale of further US sanctions will keep investors and government officials on edge.