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. Last Updated: 07/27/2016

GDP Drops 8.9%, Decline Eases

MT

The economy’s decline abated in the third quarter as companies began restocking inventories depleted during a record slump in the first half of the year, the State Statistics Service said Friday.

Gross domestic product fell 8.9 percent from a year earlier, in line with the government’s estimate, after a 10.9 percent contraction in the second quarter, the service said. On the quarter, output grew a nonseasonally adjusted 13.8 percent.

“A major driver of Russia’s sharp contraction was the inventory correction, and we are seeing the end of that,” said Vladimir Osakovsky, an economist at UniCredit Bank, before the data was released. “Any improvement in Russia’s overall economic performance is linked to this process.”  

A contraction in industrial output accelerated in October to 11.2 percent from 9.5 in the previous month, the statistics service said last month.

“Industry hasn’t returned to stable growth,” Finance Minister Alexei Kudrin said this week. “There are still problems.”

Lenders’ corporate loan books fell 0.5 percent in October, after declining 0.7 percent in September, according to data published on the Central Bank’s web site Dec. 3. Lending to consumers dropped 0.7 percent for a ninth consecutive monthly decline.

The contraction this year may have been as much as 3 percentage points deeper without anti-crisis spending, Deputy Economy Minister Andrei Klepach said on Dec. 10. The economy will probably shrink between 8.5 percent and 8.7 percent this year, he said.

As of Nov. 1, the government had spent 784 billion rubles ($26 billion) of 1.14 trillion rubles earmarked for stimulus measures, Deputy Finance Minister Tatiana Nesterenko said the same day.

Next year “there will be growth, but it will be growth after a big fall,” Kudrin said. The recovery will be complicated as governments retract stimulus programs and raise rates.