OREANDA-NEWS. July 21, 2010. Russia’s Economic Minister Elvira Nabiullina estimated 1H10 GDP growth at 4.2% YoY. Rosstat figures revealed 1.3% YoY capital investment growth in 1H10, a 3.4% YoY retail trade increase and a 50bp MoM decline in unemployment to 6.8% in June, reported the press-centre of OTKRITIE Financial Corporation.

View: We were positively surprised with the 1H10 GDP figure as it suggests 2Q10 YoY growth of about 5.5%. Furthermore, this should mean almost 2% QoQ growth in seasonally adjusted terms, which is unbelievably strong compared to the negative seasonally adjusted growth in 1Q10 indicated by the 2.9% YoY growth figure for that quarter. Consequently, we await the release by Rosstat of its initial assessment of 2Q10 GDP in August, as well as for a reassessment of previous quarters which should shed some light to the sharp turnarounds of Russian economy.

The economic performance in June suggests continued improvement in capital investment trends which we see as supportive to the economy in 2Q10. Meanwhile, retail trade remained at the level of previous months, which is likely a reflection of disposable income and real wage recovery. Still, for the second consecutive month retail trade grew faster than disposable income. This has not been the case throughout the crisis, and underscores the improved consumer confidence. By contrast, the slowdown of cargo turnover hints at a deceleration of economic activity. We are also concerned with the 33% YoY imports growth in 2Q10. Thus, we reiterate our 3.1% GDP growth forecast for FY10.