Economic growth looks better in April, albeit marginally, prompting more action from the CBR

RUSSIA ECONOMICS - In Brief 06 Jun 2025 by Evgeny Gavrilenkov
Rosstat reported that the output of the five basic sectors (flash estimate of economic activity in industry, agriculture, construction, transportation, and trade) grew y-o-y by 2.0% in April and 1.6% in 4M25. Earlier, we quoted Rosstat while mentioning some improvements in the industry last month (it resumed m-o-m growth in seasonally adjusted terms). The transportation segment also performed better in April as it increased y-o-y by 1.6% in April but was still down 0.1% in 4M25. Construction grew by 7.9% and 7.2% in April and 4M25 (both y-o-y). At the same time, agriculture posted slower y-o-y growth last month (1.4% in April and 1.6% in 4M25). Retail sales continued to decelerate y-o-y – having grown by 1.9% in April and 2.4% in 5M25. Hence, markets welcomed CBR’s key rate cut today by 100 bps to 20%, which still looks high, and one can expect more policy easing going forward as inflationary pressure eases and economic growth remains unimpressive. This year’s trend didn’t look encouraging so far, and to correct the situation, more easing will be required. As we mentioned previously, budgetary revenues are now at risk amid abruptly decelerated m-o-m inflation, strong ruble, and weak economic growth. Economic growth may somehow recover in 2H25 if rate cuts continue in a more meaningful fashion and demand for bank credits rises. Rapidly decelerating corporate and household credit appeared as important factors in the recent deceleration of economic growth.

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