More evidence on growth deceleration in January, but questions remain

RUSSIA ECONOMICS - In Brief 06 Mar 2025 by Evgeny Gavrilenkov

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In addition to recently published industrial statistics that hinted at the possibility of a sudden deceleration of economic growth, Rosstat recently provided more color on the matter. According to the statistical service, the output of the five basic sectors (B5 represents industry, agriculture, transportation, construction, and trade) grew by a mere 3.1% y-o-y in January. It contrasts sharply with a reported 7.5% y-o-y in December 2024.Meanwhile, the latter also looked unprecedentedly high as in October and November, it was up by 3.8% and 3.6% (also y-o-y). It also looks interesting that until 2020 (the first year of the pandemic), Rosstat rarely reported on December’s m-o-m B5 growth rates exceeding 10% (the only exception was in December 2014 when the economy adjusted to the first shock, associated with the start of the conflict with the West and Ukraine. In December 2014, the B5 output grew by the ‘unprecedented’ by those standards 10.7% m-o-m.We cannot rule out that the steadily increased December m-o-m numbers figures stemmed from statistical reporting effects, as in turbulent times, adequately collecting primary information may be uneasy. Hence, it is not unusual that, in some cases, economic activity under-accounted during the calendar year appears in December records. On top of that, rapidly accelerating inflation and sharp swings in the exchange rate also create statistical problems as adequately calculating sectoral deflators becomes increasingly uneasy (it was the case in 2014, 2020, and recently). Hence, revisions of historical statistical data became more frequent and significant. Meanwhile, unnaturally high December growth numbers require equally atypica...