Russian Economy Grew Fastest since 2000 on Lockdown Rebound

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Russia’s economy grew at the fastest quarterly pace since 2000 as it bounced back from coronavirus lockdowns last year.

Growth in the second quarter reached 10.3% compared to the same period of 2020, according to official data released Friday, faster than expected, taking the economy to above its pre-coronavirus level. Retail trade, passenger transit and manufacturing all showed strong growth, the Federal Statistics Service said. The median estimate of 20 economists surveyed by Bloomberg was 10%.

The latest result brings Russia in line with other emerging markets that have reported over 10% gross domestic product increases in the second quarter including Poland and the Philippines.

Russia hasn’t repeated the strict lockdown imposed in April and May of 2020, limiting restrictions even amid low vaccination rates. Its death toll from Covid-19 is among the highest in the world.

What our economists say:

Russia’s economy has bounced back much faster than expected, but growth has probably peaked. Gains from reopening are fading, while the delta wave and a withdrawal of stimulus are a mild drag on demand. Growth should continue in the third quarter, but at a considerably slower pace.

-- Scott Johnson, Bloomberg Economics

Morgan Stanley revised up its forecast this week for Russian GDP growth to 4.6% in 2021 and 3.2% in 2022 “taking on board positive data surprises and a more constructive oil price outlook.”

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