Country Economic Forecasts - Russia
Russian GDP growth accelerated to 1.8% y/y in Q2, surpassing our expectations. However, the q/q pace of expansion will likely stall in the coming quarters, amid the pressure from sanctions, notwithstanding the slight pick-up seen in the August PMIs. Consumer demand will remain the leading driver of activity, although we nonetheless expect it to soften in 2019 on the back of the planned VAT increase to 20%, from 18%, and the gradual rise in inflation. Overall, we are still forecasting GDP growth of 1.8% for 2018, before projecting a slowdown to 1.4% in 2019 (slightly weaker than last month’s estimate).