Macro week ahead – January data for Russia (IP, internal demand and labour market)
In Russia, the January data is likely to bring further details about the scale of the contraction in economic activity.
We expect to see a significant drop in retail sales driven by a decrease in demand, as foreshadowed by the sharp drop in car sales. The negative effect of lower real wages on consumption is to be exacerbated by the seasonal decrease in labour demand, which might have pushed the unemployment rate above 5.5% (standing at 5.2% SA in December).
We do not expect any positive surprises from the IP as it returns to near zero after a robust print in December. As the effect from temporary factors (including ‘flight-from-RUB’ spikes in housing and durables sales) fades, military spending and pipeline construction are unlikely to offset the negative spillover from a sharp contraction in domestic demand on manufacturing. Early figures on freight turnover and electricity production also point to a range from near zero to a slightly negative change MoM.
Alexander Isakov, Vladimir Kolychev
VTB Capital analysts
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