Speculation is growing that new central bank governor Elvira Nabiullina will cut rates to help stimulate faltering growth soon after takes up her job later this month, but the resilience of the Russian consumer may be another important factor in giving the economy a lift.
Retail sales figures have been lower than expected for the first quarter of 2013, leading economists to revise downwards their prediction for this driver of growth, though performance in the construction and cement sectors is improving, according to Morgan Stanley research:
Overall, we estimate that household consumption growth has accounted for 65 percent of Russian growth over the last decade.
The source of this growth will come from incrementally rising incomes. Nominal wage growth has been in double digits since 2010, according to the research, though once adjusted for inflation it fell last year by 4.2 percent versus a rise of 11.2 percent in April the previous year.
A tight labour market is putting upward pressure on wages, though again this has been dampened due to high inflation (7.2 percent in April).