Economic activity in Russia stabilized at the end of 2020 despite the worsening epidemic situation. The resurgence of coronavirus cases impacted economic trends less significantly at the end of 2020.
This became possible as a result of more targeted restrictions as compared to spring 2020 and economic agents’ gradual adjustment to the new conditions. These findings are given in the new issue of the Talking Trends bulletin prepared by the Bank of Russia’s Research and Forecasting Department.
At the beginning of 2021, economic activity remained at the levels reached by late 2020, which is proven by a range of high-frequency indicators. The Russian economy is expected to resume recovery in 2021 H1 as the epidemic situation improves. The pace and efficiency of mass vaccination will be a key factor determining how fast business processes will restore and return to normal.
Pro-inflationary factors have been prevailing over disinflationary ones since the end of last year. Price growth rates stay elevated across a wide range of consumer basket components, which evidences that there are not only short-term, but also longer-lasting pro-inflationary factors.
According to the authors of the bulletin, inflation will start to slow down in March, as the effect of a range of temporary factors, including those associated with last year’s ruble weakening, tapers off and the high price growth rates recorded in late 2020 Q1 — early 2020 Q2 are excluded from the calculation.
