Russia just saw its smallest economic contraction since 2014

Russia just saw its smallest contraction since 2014.

The Federal Statistics Service said that preliminary data indicated that GDP shrank by 0.6% in the second quarter compared to a year earlier, according to

This was better than economists’ expectations of a 0.8% drop, according to Bloomberg, and an improvement from the previous quarter’s 1.2% contraction.

“…indeed, it was the least bad year-on-year GDP growth figure since 2014,” observed Capital Economics Senior Emerging Markets Economist William Jackson in a note.

Although the released data did not include a breakdown of contributions to GDP growth, Jackson argues that the industrial sector’s recovery, which has benefited from the weaker ruble, was the primary force driving improvement.

The Russian ruble is up by 0.5% at 64.5465 per dollar as of 10:14 a.m. ET.

Nevertheless, Thursday’s “least bad” data is not necessarily going to impact the Central Bank of Russia’s next move.

“…while the central bank’s Q2 GDP forecast was slightly more optimistic (at -0.2%-0.4% y/y), its decisions will be influenced to a much greater extent by moves in inflation and the ruble,” argued Jackson.

Last week, data showed that headline inflation fell to its lowest level since March 2014, which analysts had suggested could inspire the central bank to resume easing in September.

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