Russia Economy in a Snapshot Q3 2020 Report





Economic Outlook

The CEIC Leading Indicator has been pointing at a slowdown of economic activity since June 2018. The smoothed version of the indicator peaked at 108.8 in May 2018 and then trended downwards, although the outlook remained positive (a value above 100) through to December 2019. In January, the indicator fell below the 100-threshold dividing expansion from contraction and continued falling through Q1 and Q2 2020 to 85.5 in June. According to the more volatile, non-adjusted version of the leading indicator, the economic contraction has been less severe, rebounding from a low of 77.8 in April 2020, to 92.5 in June.

The manufacturing purchasing managers’ index (PMI) indicates that a recovery from the April downturn has not materialised so far. Following a slump in the PMI to a seasonally-adjusted 31.3 in April, it rose to 36.2 in May, and 49.4 in June, indicating conditions were stabilising and that a recovery would begin in Q3 2020. Among the components, a positive value was recorded for the new orders index in June, which picked up to 50.3. A strong rebound of the output index to 52.1 also underpinned the rise in the manufacturing PMI. However, the figure for July showed it slipping to 48.4, driven by a decline in the employment index to 44.7.

Due to the strict stay-at-home orders imposed in March, April and part of May, the services sector was more adversely affected than manufacturing according to the services PMI. The seasonally adjusted services business activity index slumped to 12.2 in April, after already falling to 37.1 in March from 52 in February. The indicator rose to 47.8 in June and then moved above the 50-threshold dividing a positive from negative outlook in July when it rose to 58.5.