Retail sales are down about 10 percent, but the drop appears to have stabilized in a sector that accounts for about half the economy. Consumer confidence has picked up and unemployment remains at record lows.
Data from cash registers show purchases in late June picked up to pre-war levels, Economy Minister Maxim Reshetnikov told a government meeting Tuesday. “But it’s early to talk about stabilization,” he said.
Imports, which plunged 40 percent in April, have also showed signs of steadying.
The government has also stepped up spending on welfare programs and military procurement, giving an added economic boost. The central bank has reversed all the rate hikes imposed since the invasion.
“Activity indicators suggest that there is significant upside” to our 7 percent decline forecast for this year, Goldman economist Clemens Grafe said in a research note.
Still, forecasters warn of substantial uncertainty about the outlook. Quicker-than-expected imposition of limits on Russian energy in Europe could hit revenue in the second half, as could a drop in demand if fears of a recession prove justified.
Signs of tightening inventories in Russia in recent months may mean sanctions pain will deepen as supplies run out. Ruble strength could lead exporters to cut production as they are priced out of markets.
“There are grounds for optimism,” said Natalia Lavrova, chief economist at BCS Financial Group in Moscow. “The risks are somewhat lower for 2022, but they also have moved to 2023 because of the oil embargo,” she said, referring to EU plans to restrict imports next year.