Beyond Expectations: Russia's Service Sector Showing Astonishing Growth

Russia's services sector is demonstrating astonishing growth, hitting a 20-month high in July, despite low oil prices and an anti-Russia sanctions policy maintained by the West.

Contrary to US President Obama's gloomy predictions, Russia's economy is not in tatters, a Markit survey has indicated Wednesday.

"July's headline Business Activity Index for the [Russian] service sector recorded a level of 51.6, up from 49.5 in the previous month… Moreover, the rate of growth accelerated to the highest recorded for twenty months amid reports that a more positive economic climate was driving demand for services upwards," the latest report released by Markit, a global provider of financial information services, reads.

The report notes that the respective Composite Output Index improved to 50.9 in July, up from 49.5 in the preceding month.

The rate of inflation eased to the lowest seen for 11 months, while the unemployment rate "inexplicably" declined to 5.4 percent.

"Amid reports of a gradually improving business climate, which led to the best increase in new work for 20 months, the Russian service sector helped to drive some marginal growth of the economy at the start of the third quarter of 2015," Senior Economist at Markit Paul Smith emphasized in the report.

In general, Russia has done better than anyone expected, Western experts admit.

In mid-July Russian Prime Minister Dmitry Medvedev claimed that the worst scenarios for Russia's economy have been avoided.

"The worst scenarios, perhaps, did not take place. The economic situation remains difficult, but controlled, thanks, among other things, to the joint work of the government, the Central Bank, the legislature," Medvedev said.

In turn Russia's Economy Minister Alexey Ulyukayev emphasized that Russia had already passed "the lowest point," adding that from the third quarter, "there will be some adjustment."

The Russian economy had previously faced a downturn caused by the global fall in oil prices and, to a lesser extent, by sanctions policy imposed by the West.