Local demand in Russia nearly came to a standstill in July, according to economic data released by Rosstat on Wednesday.
"Local demand almost came to a full stop, and there is little to prevent it from dipping below the waterline in [the third quarter]," VTB Capital analysts Daria Isakova and Vladimir Kolychev said.
The statistics showed unemployment stood at 4.9 percent for the second consecutive month, fixed capital investments declined 2.0 percent year-over-year, retail sales were up 1.1 percent, new housing construction rose by 38.5 percent, real wages edged up 1.8 percent and agricultural exports increased by 8.5 percent.
"Consumer spending is firmly on the downward trend," Isakova and Kolychev said. "The pace of annual growth in real retail sales is hovering near 4.5-year lows... restrained by... lackluster incomes growth and... tightening access to consumer credit. There is no short-term cure for [either] of the two and, moreover, elevated and rising food inflation will continue to eat into households' spending power. Component-wise, spending on big ticket items, such as car sales was particularly affected."
They also said that investment is back in the red with companies pressured to save and deleverage given political uncertainty and more difficult borrowing conditions.
"Net exports cushion impact on economy," Isakova and Kolychev said. "[They will] unlikely... be strong enough to keep GDP growth from dipping under water in [the second half of 2014], particularly in light of the unfavorable statistical base effect."
- National Bank of Ukraine removes restrictions on foreign-currency transactions, investment metals
- Black Sea Trade & Development Bank visits Azerbaijan to boost business relationships
- VTB Bank finances three new planes for SunExpress airline
- National Bank of Ukraine makes it easier for businesses to invest abroad
- National Bank of Ukraine eases lending regulations for deposit guarantee funds to other banks
- Black Sea Trade and Development Bank, Russian Federal Corp. for SMEs support business growth
- Oleg Demidov named commercial director for Rosbank Factoring
- Eurasian Development Bank sells bonds on Kazakhstan Stock Exchange
- EY World Entrepreneur of the Year event to name world's top entrepreneur
- ACBA-CREDIT AGRICOLE, Microsoft parter for Armenian digital business technology seminar