Russia’s economy grew 4.3% year-on-year in the third quarter, but the post-coronavirus recovery is nearly complete. The result was close to Sova Capital’s expectations (+4.2% YoY) but below Bloomberg consensus (+4.5% YoY), according to RosStat’s preliminary 3Q21 GDP growth estimate released November 17.

“The strong 3Q21 numbers were likely driven by still strong but declining momentum in retail and wholesale trade, manufacturing, and freight and passenger revenue,” Sova Capital said in a note.

At the same time, mining and quarrying as well as the financial sector probably did better than in 2Q21, reports Sova Capital.

“According to our estimates, the economy added only 0.15% SA q/q in 3Q21 after adding 2.1% SA q/q in 2Q21. We expect partial 4Q21 GDP growth to be weaker than expected, and our forecast calls for 1.7% year-on-year growth Our Russia growth outlook for FY21 is 3.8%, which which is lower than estimates by the CBR (+4-4.5%y/y) and the Russian Ministry of Economic Development (+4.2%y/y),” the bank said in a note.

In the prior quarter, the economy grew 4.3%y/y, close to Sova’s forecast (+4.2%y/y) but below Bloomberg consensus (+4.5%y /at). The estimate is based on the production approach, which uses data from large and medium-sized enterprises in the non-financial sector.

According to RosStat, which did not disclose any additional details, its 3Q21 GDP estimate was largely influenced by the sustained recovery in retail (+5.3% y/y) and wholesale (+6.7). % y/y), construction (+5% y/y) a) and industry (+3.7% y/y), as well as freight revenue (+6.8% y /a) and passenger revenue (+49% y/y).

Compared to 2Q21, most indicators saw their growth rates halve in 3Q21 compared to 2Q21, while retail and wholesale trade growth rates were four times lower.

“The main exceptions in our view are mining and quarrying (+9.4% y/y), where the recovery in volumes has accelerated thanks to the easing of restrictions from OPEC+; and the financial sector, whose growth has been accompanied by higher rates, although these have not been enough to offset rising inflation and the still strong demand for mortgages after the revision of subsidized programs,” reports Sova Capital.

“Russia’s economic recovery nearly stalled in 3Q21 after surpassing 4Q19 levels in 2Q21 (+0.15% SA q/q in 3Q21 vs. +2.1% SA q/q in 2Q21, according to our The non-working period and partial shutdowns are expected to dampen Russia’s outlook for 4Q21, and we expect the country’s GDP growth to slow to 1.7% YoY in 4Q21 due to these restrictions. Estimates say the 11-day partial lockdown in Moscow, Moscow Region, St. Petersburg and other areas could cost Russia more than 0.3% of its FY21 GDP growth. As a result, we expect Russia’s FY21 GDP growth to be 3.8% year-on-year,” the bank added.