Rosstat’s estimate of annual GDP growth of 5.5% in the third quarter turned out to be noticeably better than the expectations of both the Ministry of Economy (5.2%) and the Bank of Russia (5.1%). Over three quarters, the Russian economy grew by 2.9%, the ministry calculated. Rosstat’s estimate already exceeds the Ministry of Economy’s forecast for 2023 by 0.1 percentage points (pp), and recently the head of the ministry, Maxim Reshetnikov, said that GDP growth for the year could reach 3%. The chief economist of VEB.RF, Andrei Klepach, was even more optimistic yesterday: “For the year, growth will generally be 3.2–3.3% of GDP.” “We won’t be surprised if it’s higher than 3%,” the authors of the MMI Telegram channel admitted yesterday, calling Rosstat’s assessment a consequence of “playing with deflators in the production of military products.” Bloomberg Economics calculated that GDP growth excluding the financial sector (by 7.4% in the third quarter) was 3 percentage points driven by processing, including the defense industry, and the same amount by wholesale trade; retail and construction added another 1 p.p. to the annual growth.
Rosstat did not publish estimates of intra-annual seasonally adjusted growth in the third quarter, but Bloomberg Economics analysts note its noticeable acceleration – to 1.3% from 0.8% in the second quarter – and, like the Central Bank (albeit with different estimates), insist that the economy remains severely overheated and deviates steadily upward from long-term trend growth (see chart). “The economy is overheating, deviating upward from trend (by approximately 2.5% of GDP) and even above 2021 peaks. Further growth is constrained by barriers on the supply side: a shortage of available labor resources and limited logistics capabilities. Fiscal stimulus in 2024 without eliminating bottlenecks will probably not be able to create additional output volumes, but may have a stronger impact on the redistribution of resources across sectors of the economy, allocating them to the most productive (or having preferences in access to financial resources) sectors,” they explain at the Macro Forecasting Center of Gazprombank, expecting high economic activity and inflation to continue until the end of the year. Bloomberg Economics expects a “nano-recession”: “in the fourth quarter of 2023 – the first quarter of 2024, GDP will decline by 0.1–0.2% quarter-on-quarter,” as a result, in 2023 economic growth may actually reach 3%, but slow down up to 0.9–1% in 2024.