RosStat’s report on September's base sectors and other fundamental indicators shows the continuation of the negative stagnation trend seen in H1/13. Capital investment continued to be negative: declining by 1.6% y/y in September alone and by 1.4% y/y in Jan-Sep overall (vs. EconMin’s expectations of 2.4% growth in 2013).

Industrial output continued to fluctuate around 0% growth, inching up by 0.3% y/y in September. Transportation turnover recovered in August and September to 0.3% y/y and 1.8% y/y growth, which was not in line with the data on stagnating industry. However, transportation is supported by 5.8% y/y increase in pipeline transportation in September, which is likely due to Rosneft starting additional oil supplies to China as of August. Railroad transportation, on the other hand, is indeed in decline of 1.5% y/y in September and 2.6% y/y in Jan-Sep overall.  

Construction continues its y/y decline, decreasing by 2.9% y/y in September and 1.1% y/y in Jan-Sep overall. Agriculture (which was previously hoped by the EconMin as one of the main factors that were supposed to support recovery in H2/13) also continued slowing down, declining by 1.4% y/y in September.

While domestic demand remains the key driver of Russian growth in 2013, retail trade also in on a downwards trend: in September it increased by 3% y/y vs. 3.5% y/y in June and 4.4% y/y in March. Both food and non-food retail sales in September declined at the same pace y/y. In Jan-Sep overall retail trade gained 3.8% y/y vs. 6.9% y/y growth for the same period of last year.

This week deputy EconMin Andrei Klepach said that given the dynamics of the industrial output seen in September, the target growth of the indicator for 2013 could be not reached. Currently the EconMin expects industrial output to gain modest 0.7% in 2013.

To remind, in August the EconMin revised the industrial output growth forecast downwards from 2% to 0.7%. GDP growth forecast for 2013 was cut for the second time this year to 1.8%. Klepach also said that there are risks that GDP growth will below the revised forecast amounting to 1.5%-1.6% and confirmed that in Q3/13 economy continued stagnating with GDP growth estimated at close to zero.