Publication: Monitor Volume: 8 Issue: 8

Roskomstat released figures for Russian third-quarter GDP growth in late December, showing a year-on-year increase of 4.9 percent. For the first three quarters of 2001 combined, Russian GDP was up 5.0 percent year-on-year. Although that pace is well behind the heady 8.3 percent pace registered in 2000, it is clearly a very solid performance in light of falling world market oil prices and the recessions elsewhere in the world. Production of goods actually accelerated considerably in the third quarter, rising 6.9 percent year-on-year compared with 4.9 percent in the first quarter and 5.5 percent in the second. The increase in output of goods was due primarily to the excellent performance of Russia’s long-suffering agricultural sector. Agriculture benefited from very favorable conditions for sowing, growing and harvesting. Consequently, value added from agriculture surged 10.1 percent in the third quarter, compared to the same quarter of 2000. The construction boom, spurred by the surge in investment in fixed capital, also contributed significantly to growth in GDP. In contrast, value added in industry grew more slowly in the third quarter, up 4.5 percent after increases of 5.2 percent and 5.9 percent in the first and second quarters, respectively.

Russian consumers and businesses are both enjoying many of the benefits of this growth. Indicators such as retail sales turnover and expenditures on gross investment in fixed capital confirm that growth in domestic demand remains strong, driving the expansion of aggregate output. Growth in retail trade turnover in real terms surged 10.1 percent in the third quarter, following 9.5 percent growth in the first half of 2001. Expenditures on gross investment in fixed capital were up 8.9 percent year-on-year in November and were 8.3 percent higher for the first eleven months of 2001. Housing construction is also in high gear. Commissioning of new housing stock is always heavily concentrated in the fourth quarter. In 2001, square meters of newly commissioned housing were up 34.3 percent in October and 34.5 percent in November year-on-year. For the first 11 months of the year, that indicator increased by 9.6 percent. Given such positive results, the Russian economy is likely to have grown by over 5 percent in 2001 (Roskomstat).