Recovery in services boosts on-year GDP growth; seasonally adjusted GDP contracts from previous quarter

Russian third-quarter GDP was up by 4.3 % y-o-y and up by 0.6 % from two years previous. Russian GDP already exceeded the pre-pandemic level in the second quarter. In this sense, Russia has already recovered from the Covid Recession of 2020. The economic development ministry estimates that on-year GDP growth accelerated to 4.9 % in October (BOFIT Weekly 49/2021).

On-year third quarter growth in value added was highest in such branches as hotels and restaurants (up 16.7 %), minerals extraction (8.4 %) and transportation (7.1 %). Covid restrictions prevented consumption of many services in the second half of 2020, so the rapid growth in service branches this year is unsurprising. In addition, rising oil prices and decisions by the OPEC+ group of oil producing countries to raise crude oil production ceilings are reflected in a strong recovery in the mineral extraction sector (BOFIT Weekly 29/2021).

While Russian GDP grew on year, it contracted by 0.8 % q-o-q when seasonally adjusted. Production was down in several branches, including minerals extraction, manufacturing and retail sales. The rise of the corona virus and a new round of covid restrictions reduced economic growth. Demand for services also weakened as people voluntarily limited their movements.

Russian GDP has risen by about 12 % over the past decade, seasonally adjusted GDP volume in 2016 prices, RUB billion

Sources: Rosstat and BOFIT.