Economic growth accelerates at the expense of domestic demand

The acceleration of economic growth that began in the third quarter continued in the fourth quarter of 2019. On the background of the recovery in domestic demand in the economy, there have been some signs of increasing inflationary pressures, which form the preconditions for the return of inflation to the target of 4% by the end of 2020. To such conclusion authors of the next edition of the newsletter “what do the trends” prepared by the Department of studies and forecasting of the Bank of Russia.

The rate of growth of the Russian economy will continue to accelerate and is estimated to be at potential rates in the first half of 2020. This happens mainly due to the improvement in domestic demand, which allows you to offset the negative impact of subpar growth in the world economy on the dynamics of the Russian export. A revival in consumer spending, as well as catching-up dynamics of budget spending in the second half of accelerating growth in domestic demand.

The slowdown in annual inflation under the influence of a number of disinflationary factors will continue in early 2020, when inflation will temporarily fall below 3%. At the same time in November there are signs of increasing inflationary pressure amid the recovery of domestic demand. Together with the termination of one-off disinflationary factors and delayed effects from taken in 2019, decisions on monetary policy this creates the preconditions for the return of inflation to 4% by the end of 2020.

The conclusions and recommendations contained in the Bulletin may not necessarily reflect the official position of Bank of Russia.

19 December 2019