A flash estimate by RosStat indicates that Q1 real GDP grew by +1.3% y/y. Although slower than expected, it marks a recovery from the slowdown at the end of 2017 (+0.9% y/y in Q4). Details for Q1 are not available as yet. However, early indicators for April suggest that the recovery has continued at the start of Q2. The PMIs for both Manufacturing and Services picked up to 51.3 and 55.5 points (from 50.6 and 53.7 in March), respectively. And industrial production growth increased to +1.3% y/y (from 1% in March) while retail sales growth accelerated to +2.4% y/y (+2% in March). Moreover, construction output expanded by +1.4% y/y in April, a sharp reversal from the -9.7% decline in March. It appears that the financial market turbulences triggered by the imposition of stricter U.S. sanctions in April have had little impact on financial conditions and the real economy, for now. We forecast full-year GDP growth of about +1.9% in 2018.
