The Russian economy is entering the stage of recession, which is very likely to become manifest in the third quarter. The drop in industrial production slowed down in May, but largely due to defense contracts. However, judging by GDP dynamics and high-frequency business activity data, there is a pronounced slowdown in the economy. Excessive appreciation of the Ruble may make recovery from the recession harder. A detailed review of macroeconomic trends published by the Center for Macroeconomic Analysis and Short-term Forecasting (CMASF) confirms the conclusions of our report on the effect of sanctions on the Russian economy.
In May, "according to a preliminary indirect assessment," there was a further decline in the investment activity index, which amounted to 91.9% of the monthly average of 2019. An important characteristic of the moment is the historically unprecedented "crisis reversal" of consumer sentiment: assessments of the current economic condition are at a historic low, while expectations for the future are almost at a maximum (and rising). People are waiting for a sharp reversal of the current trends.