Russian statistics agency Rosstat has revised the flash estimate of GDP growth in 3Q18 from previous 1.3% y/y to 1.5% y/y. The accompanying GDP breakdown by industry showed that the financial sector, trade, transportation, and extraction remaining the main growth contributors.
Previously the analysts were puzzled by Rosstat revising fixed asset investment (FAI) in the economy to 5.2% y/y for 3Q18 as compared with 2.8% and 3.6% in 2Q18 and 1Q18.
"Following the surprising release of FAI growth print, Rosstat has revised its flash estimate of GDP expansion in 3Q18 as well. While in November it posted the 1.3% y/y growth, currently it stands at 1.5%," VTB Capital commented on November 13.
VTB notes that the financial sector accelerating to 9.7% y/y growth from 8.6% y/y in 2Q18 can be explained by the growing demand for borrowing, as the sector in never capacity-constrained. By the end of September, private sector debt (excluding mortgage loans) had already risen 25% y/y, from 19% y/y by the end of 1Q18, the bank reminds.
The wholesale and retail trade sector continued to expand, adding 2.1% y/y, versus 1.9% y/y in 2Q18. VTB believes that "in 4Q18, the contribution of the sector to GDP will be even greater, given the ongoing recovery in food sales, complemented by the expansion in non-food in the run-up to the VAT rate hike."
Same as already observed from the monthly oil output data, the extraction sector in 3Q18 benefited from the relaxation of the Opec+ deal relaxation (as of July) and almost doubled the growth from 2.6% y/y in 2Q18 to 5% in 3Q18.