By Zlata Garasyuta
MOSCOW (Reuters) – Russia’s growth prospects have improved after better macroeconomic data in April and a surprisingly large central bank rate cut, a Reuters poll of economists showed on Wednesday.
Gross domestic product (GDP) is now seen growing by 1.4 percent this year, better than last month’s call for 1.1 percent growth but short of the economy ministry’s 2 percent growth target.
Economists turned more bullish after retail sales were flat in April, the first month they did not record a year-on-year fall since December 2014, while industrial output rose by 2.3 percent last month.
Data released last week also showed that capital investment rose in the first quarter, reversing a deep slump.
After last month’s poll, the Russian central bank cut its main lending rate by 50 basis points to 9.25 percent <RUCBIR=ECI>, lowering the cost of borrowing in the economy.
“We’re anticipating a recovery in consumer demand in the second half of the year, and in May we are expecting retail sales to rise by 0.8 percent year on year,” said Ekaterina Krylova at Promsvyazbank.
Retail sales are the largest contributor to Russian GDP, and the latest Reuters poll predicted they will rise 1.3 percent for 2017 as a whole. Industrial output is seen up 2.0 percent, and real wages rising by 2.5 percent this year.
The consensus view on year-end inflation is for a reading of 4.1 percent, close to the central bank’s target of 4 percent and at the same level as in April.
The Russian central bank is expected to cut its key rate by another 25 basis points at its next monetary policy meeting on June 16, and the consensus is for the rate to be at either 8 percent or 8.25 percent at the end of the year.
The rouble is seen at 56.6 to the dollar one year from now, compared with Wednesday’s level of 56.7 <RUBUTSTN=MCX>, the poll showed. That was significantly more bullish than last month’s forecast for a rate of 61.0 to the dollar at the end of April 2018, reflecting the decision earlier this month for OPEC and non-OPEC oil producers to extend a pact to limit output.
(To view a graphic on the Russia poll, click http://reut.rs/2raB8uq)
(Polling by Zlata Garasyuta; Writing by Alexander Winning Editing by Jeremy Gaunt)