2017.05.2208:18:00UTC+00Russia's Growth Likely To Pick Up Pace In 2017: Capital Economics

Russia's economic growth will continue to edge up over the coming quarters of this year as lower inflation and looser monetary policy strengthen demand, Capital Economics economist Neil Shearing said.

Official data from Rosstat showed this month that GDP grew 0.5 percent year-over-year in the first quarter, faster than the 0.3 percent rise in the final three months of 2016. This was the second successive quarterly growth.

The latest data indicated that Russia's economy has continued "slow but steady recovery" during the March quarter, the economist noted.

"Rosstat does not release a quarter-on-quarter estimate of GDP, but we reckon that the annual rate of growth is consistent with a quarterly rate of expansion of around 0.2 percent," Shearing said.

"We would, however, caution that there is significant uncertainty around these numbers, not least because none of the GDP data in Russia are calendar adjusted."

The economist observed that calendar effects will have shaved something like 1.0 percent off the annual rate of growth.

Citing the monthly data, the economist pointed out that industrial production and construction have softened partly due to working day effects. Retail sales data suggested that the squeeze on consumers has started to ease, helped no doubt by the drop in inflation, Shearing said.

"We expect GDP to grow by 1.5 percent this year and 2.3 percent next year," the economist predicted.