Russia’s 2020 GDP Contraction Outlook Upgraded to 3.8%, Says Minister

Russia’s Economic Development Ministry has upgraded its 2020 GDP contraction outlook to 3.8% from 3.9% projected earlier, Minister Maksim Reshetnikov said addressing members of the Federation Council on Friday, TASS reports.

“After a decline in the second quarter, the economy is gradually recovering. Our 2020 GDP projection is minus 3.8%, which almost coincides with the outlook provided in August [-3.9% – TASS],” he said.

“The crisis did not become systemic, and its hitting systemic sectors and enterprises was prevented. Manufacturing output almost reached last year’s level in 11 months of 2020, agriculture gained 1.5%, construction [growth] rates also stabilized,” the minister said, adding that the OPEC+ crude output cuts agreement is restraining the recovery of physical indicators of the industry.

A representative of the Economic Development Ministry explained later that its monthly GDP projections, as well as quarterly GDP figures provided by Rosstat, are based on a number of assumptions on the dynamics of components, complete data on which are available on a yearly basis (first of all about small businesses). Moreover, by the moment when annual results are summarized actual data on certain such components become available – as a result annual projection may deviate from the ministry’s estimation of 12 months and from Rosstat’s estimation of 9 months.

“This year such a scenario is highly probable due to strong uncertainty and changes in structural relations in the economy. That is why the Economic Development Ministry sticks to a conservative approach to GDP estimations overall for the year, despite more positive 11M dynamics than expected,” the ministry noted.

Earlier the ministry said that Russia’s GDP contraction slowed down to 3.7% in annual terms in November after the revised 4.5% in October, whereas in 11 months the contraction amounted to 3.5%.

According to the ministry’s projections provided in September, Russia’s GDP contraction was expected at 3.9% in 2020. In 2021, GDP is expected to grow by 3.3%.