REGIONAL REPORT to partially pass on price hikes to clients . Encouragingly , firms expanded their workforces at the joint-sharpest rate since March 2019 . Business confidence , however , moderated slightly since December amid concerns regarding the ongoing pandemic ,” said the analyst .
According to the analyst , production increased for the first time since last September at the start of 2021 . The renewed expansion in output was often linked to stronger client demand and an upturn in new orders . January data signalled a return to growth in new business received by Russian manufacturers , with some firms stating that ‘ orders previously placed on hold by clients due to the pandemic had been approved ’. Although only marginal overall , the rate of growth was the fastest since August 2020 . In contrast , new export orders contracted markedly and at the sharpest rate since last May .
However , the analyst highlighted that supply chain disruption worsened further in January .
“ Lead times lengthened to the greatest extent since last May , with firms linking this to transportation delays and raw material shortages at suppliers ,” it cautioned .
Economy and supply chains
According to the World Bank , the Russian economy contracted in the second quarter of 2020 by eight per cent and the third quarter of 2020 by 3.4 per cent . This negative momentum was expected to continue in the last quarter of 2020 , amidst the resurgence of the pandemic , according to the World Bank ’ s latest Russia Economic Report (# 44 in the series ). The report also says that fiscal , monetary and social policies put in place have helped to contain the impact of the pandemic-induced crisis to date .
“ Russian economic growth is projected at -4 per cent in 2020 , a less severe contraction than the forecast in September . The revision reflects the better-than-anticipated economic performance in the third quarter of 2020 . Consumer and business confidence is expected to improve assuming a vaccine deemed safe and effective is rolled out ; this would pave the way for a gradual rebound at 2.6 and 3.0 per cent in 2021 and 2022 , respectively ,” it said .
There are opportunities to drive Russia ’ s long-term economic growth , by deepening and expanding Russia ’ s participation in manufacturing and services global value chains
However , a more adverse scenario suggesting a sharp growth in new COVID-19 cases continuing in the second half of 2021 could further weigh on economic activity . In such a case , GDP in 2021 is projected to grow by 0.6 per cent , with consumers and investment demand affected more deeply , and to increase by 2.8 per cent in 2022 .
“ Countercyclical fiscal policy and sizeable macro-fiscal buffers have helped to contain the impact of the crisis . The general government deficit is expected to reach 4.6 per cent of GDP in 2020 , compared to a surplus of 1.9 per cent of GDP in 2019 . After a stronger fiscal stimulus in 2020 , Russia ’ s fiscal consolidation in 2021-2022 will be deeper than in other emerging markets and developing economies and become a drag on growth ,” said the World Bank .
“ Given relatively low public debt , sizeable macro-fiscal buffers and expected relatively modest pick-up in growth , Russia has some fiscal space for a more gradual fiscal consolidation ,” said Apurva Sanghi , the lead economist for the World Bank in Russia .
The effects of the pandemic have touched various spheres of the Russian economy : the unemployment rate increased to 6.3 per cent in October 2020 , the highest in eight years . Approximately half a million jobs have been lost in each of three large sectors : manufacturing , construction and retail and hospitality services between the second quarters of 2020 and 2019 . The national poverty rate increased to 12.6 per cent and 13.2 percent in the first and second quarter of 2020 , respectively .
“ The economic deceleration could have led to an increase to 14.2 per cent in 2020 . However , relevant adopted policies may fully offset the impact of the crisis on the poverty rate - the 2020 rate is projected to be around or slightly below the level projected for the year before the pandemic ,” said the World Bank .
The report also assesses how regional and global value chains ( GVCs ) have contributed to Russia ’ s development over
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