Russia President Vladimir Putin's spending promises before this year's elections helped drived government consumption of Russian products up, aiding the strong GDP numbers.Reuters
Russia's economy grew by a robust 4.9 per cent in the first quarter, significantly outperforming forecasts, but economists remained cautious about lifting their growth outlooks for 2012 against the backdrop of a cooling global economy.
The Federal Statistics Service did not provide any breakdown with the GDP figures but Dmitry Polevoy, economist at ING bank, in a research note, suggested the impressive year-on-year expansion was the result of strong government consumption and a slowdown in import growth, as well as higher inventories.
The figure, which defied a recent slowdown in industrial output, was a "a total surprise to the market," he said.
The first official estimate for first-quarter GDP slightly outpaced the 4.8 per cent year-on-year reading for the final quarter of last year.
Russia has seen robust 7 to 8 per cent growth in consumption during the first months of this year, driven by higher real wages and government spending in advance of the presidential election in March won by Vladimir Putin.
However, analysts anticipate consumption growth to slow down later in the year as the government tightens spending and raises household utility prices.
The preliminary GDP headline reading, which is often subject to revision, was higher than an initial estimate of 4 per cent made by Economy Minister Elvira Nabiullina last month.
Most economists had also expected first-quarter growth of around 4 per cent, consistent with a slowdown in industrial output seen over recent months.
Mr. Polevoy noted that the Statistics Service is revising its measurement of GDP to include imputed rental income, which may have provided a nominal boost to GDP.
"This is certainly positive news that may provide some relief to the market," Ivan Tchakarov, chief Russia economist at Renaissance Capital, said in a research note.
He cautioned, however, that the initial growth estimate may subsequently be revised downwards, and that similarly strong growth is unlikely to be sustained over the coming months.
Economists also cautioned that since the first quarter, global sentiment has deteriorated, as political uncertainty in the euro zone raises new fears about global financial stability.
The worsening global environment has indirectly impacted Russia, contributing to falling oil prices and a 20 per cent slump in Russia's stock market since March that has erased all gains for the current year to date.
"This (GDP) statistic tells us that there were positive sentiments in the first quarter, which unfortunately could have changed for the worse in the second," said Natalia Orlova, economist at Alfa Bank.
Economists polled by Reuters last month anticipated 3.6 per cent growth in Russia's GDP for 2012 as a whole, compared with 4.3 per cent growth in 2011.