Russia's Federal State Statistics Service (RosStat) has released detailed data on developments in GDP in the second quarter of 2010 by sector of origin. The new data confirm the earlier flash estimate of 5.2% year-on-year (y/y) GDP growth in the second quarter following upwardly revised growth at 3.1% y/y in the first quarter. For the first half of the year, the growth figure came in at 4.2% compared with a decline in GDP by 10.2% in the same period of 2009. This means that despite the pick-up in growth momentum in the second quarter relative to a quarter earlier, the level of aggregate output remained well below that achieved in the first half of 2008. Data on the breakdown of GDP by end-use in the second quarter of 2010 will be made available at a later date.

The rebound in the second quarter was led by those sectors that took the brunt of the 2008-09 recession. Manufacturing in particular, which saw a 22.1% decline in output in the first half of 2009, grew at 15.3% y/y. This was followed by a 9.6% increase in value added in transport and communication, which typically moves in concert with industry and agriculture, and a 5.2 % y/y increase in value added in natural resource extraction. Two sectors that did not fit this pattern were construction and financial activity. Although value-added in the construction sector declined by nearly 20% y/y in the second quarter of 2009, it declined a further 0.3% y/y in the second quarter of 2010 and was down 3.9% in the first half of the year. This reflects continued weakness in capital spending by Russian enterprises. In contrast, value added in financial services was the only sector to enjoy significant growth in value added in the first half of 2009. The picture was markedly different in the first half of 2010. Value added in financial services plunged 7.3% y/y in the first quarter and 1.2% y/y in the second, but from a relatively high base.

Outlook and Implications