Retail sales in Russia increased more than predicted in April as the economy recovers from the effects of last year’s COVID-19 economic blockade. This has bolstered officials’ pledges of a faster-than-anticipated recovery, according to figures released on Friday.
Retail sales increased 34.7 percent year over year, according to the statistics office, exceeding the 23 percent growth predicted by economists in a Reuters survey.
Russia’s central bank and the Ministry of Economy predict the economy would rebound to pre-pandemic levels in the next weeks. Furthermore, they predict that GDP growth in 2021 would be near to the 3% objective. During the outbreak of the epidemic in April of last year, lockdown restrictions hindered economic activity.
After a 3% decline in 2020, the steepest in 11 years, Russia’s commodity-dependent economy is on the mend. However economists fear that the recovery may fizzle out owing to a lack of structural changes and investments.
Retail sales increased 0.3 percent month over month in April. Retail is a measure of consumer demand and a crucial economic engine in Russia.
Russia’s rebounding economy, according to Finance Minister Anton Siluanov, is at risk of overheating. The minister added that annual inflation is currently at 5.9%, considerably over the central bank’s objective of 4%.
High inflation has pushed the central bank to hike interest rates twice this year to 5%. This, in turn has increased the cost of borrowing. According to a Reuters survey of economists, the key rate is generally expected to be lifted to 5.25 percent next week.