Russia's economy grows most in six years despite Western sanctions

RT
Tue, 05 Feb 2019 07:39 UTC

© Sputnik / Roman Yandolin

Peterhof Palace, St. Petersburg, Russia

The Russian economy has seen the biggest growth since 2012, expanding by 2.3 percent last year, according to preliminary estimates provided by Russian state statistics agency.

Gross domestic product (GDP) rose 0.7 percent in 2018 compared to 1.6 percent the year earlier, and amounted to 103.6 trillion rubles ($1.6 trillion), Rosstat revealed on Monday. The growth surpassed earlier projections from Russia's economy ministry, which expected the economic growth to stand at 2 percent, as well as the World Bank forecast.

Hotel and food businesses, as well as financial and insurance sectors, have seen the biggest gains, both marking more than a 6 percent growth, the data shows. Construction and mining operations also demonstrated a significant contribution to the overall economic growth, expanding 4.7 percent and 3.8 percent correspondingly.

Despite compelling growth in Russia's agricultural sector in October last year, it finished the year in decline, falling some 2 percent.

Comment: Being a world exporter in grains means a decline in it's agricultural sector isn't just bad news for Russia.

The country's economy has been expanding for three consecutive years since a 2.5 percent decline in 2015, the first full year under Western sanctions. The last time the country's GDP growth was bigger was in 2012, when it amounted to 3.7 percent.

Earlier, the World Bank said that the Russian economy increased just 1.6 percent in 2018, adding that it may face a short-term slowdown this year to 1.5 percent. The body expects the growth rate of the country's GDP to stand at 1.8 percent in 2020 and 2021.

At the same time, Russia is expected to become the world's fifth-largest economy next year, surpassing Germany and the UK, according to long-term growth forecasts published by multinational bank Standard Chartered.

Comment: More from RT:

Russian stock market hits historic high as oil prices rally

The Moscow stock exchange (MOEX) index reached a new all-time high on Tuesday as global oil prices continue to climb. Russian stocks have also been surging since the US lifted sanctions against Russian aluminum giant Rusal.

The MOEX index hit two records in a row as trading opened this week. It rose to 2537.47 points on Monday and closed at 2523.52 points, a historic high for the end of the trading day. On Tuesday, the index continued to surge, hitting a record 2548.78 points as of 12:39 Moscow time (09:39am GMT).

MOEX is the main ruble-denominated index of the Russian stock market, comprised of the shares from more than 40 major Russian companies, including Sberbank, Gazprom, Rosneft, UC Rusal, Novatek and other blue chip firms.

The number of investors on the Moscow Exchange recently reached two million, with more than 700,000 people joining trading in 2018. Banks were most active in opening retail investment accounts last year.

Total trading volume across the Moscow Exchange markets increased by 1.5% to 58.9 trillion rubles (nearly $900 billion) in January 2019, compared to the same period last year.

The growth of the MOEX index was supported by rising oil prices. On Monday, global benchmarks West Texas Intermediate (WTI) and Brent crude reached their highest price level since last November. On Tuesday morning, crude prices rolled back slightly, with Brent trading at $62.23 a barrel and US WTI crude standing at $54.41.

Russian markets were also boosted after Washington lifted its punitive measures against aluminum giant Rusal and two other companies linked to businessman Oleg Deripaska. The companies significantly diminished Deripaska's ownership and severed his control. Now Rusal as well as its parent, En+ Group, may hope for inclusion in the global MSCI index.

"EN+ Group and United Company RUSAL are now eligible for potential inclusion in the MSCI Equity Indexes should they meet the necessary requirements as per the MSCI Global Investable Market Indexes methodology," the company said in a statement on Friday.

Few Western economies could have survived the financial attacks Russia has endured:

• The Duran vidcast: Why Russia will not fall victim to financial terrorism
• Russia outmaneuvers unreliable US gas, and Brits buy up half of Russia's Eurobonds
• Oil prices slide due to uncertainty in global economy, peaked following US sanctions on Iran and Venezuela