Country Insights

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Moody’s upgrades Russia to investment grade: we expect neutral impact
RUSSIA ENERGY / FINANCE - In Brief 11 Feb 2019
Last Friday Moody’s upgraded its sovereign credit rating Russia from Ba1 to Baa3, a lowest investment grade with stable outlook. Moody's believes that Russia's stability as a sovereign borrower has decreased significantly. FX reserves cover 80% of the external debt which is main rationale for the...

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+2.3% GDP growth in 2018 will not force CBR to hike in February
RUSSIA ENERGY / FINANCE - In Brief 07 Feb 2019
After two previous hikes totaling 50 b.p. we expect CBR to stand still and keep the key rate unchanged on the February 8 meeting. Favorable global financial conditions and relatively high oil prices support decision to stay still. But there are some economic news for CBR to consider. First, Rosst...

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Large revision in construction raises questions about data quality
RUSSIA ENERGY / FINANCE - In Brief 01 Feb 2019
Last week Rosstat published main indicators for December 2018 which can be used to estimate last year results. On paper, it looks good. Industrial production increased 2.9% (+2.1% in 2017). Retail trade grew 2.6% (+1.3% in 2017). Real wages surged 6.8% last year (+2.9%). Based on the December dat...

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Not as bad as you may think
RUSSIA ENERGY / FINANCE - Forecast 21 Dec 2018
2018 was moderately successful for the Russian economy. Despite new round of the US sanctions in April 2018 and lower oil prices in 4Q18, GDP is set to grow 1.6% in 2018. The current strategy of the Government outlined by the presidential May decrees is to increase taxation while using these ...

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Energy forecast: Higher investment despite OPEC+ cut
RUSSIA ENERGY / FINANCE - Forecast 20 Dec 2018
Oil and gas has long been a workhorse for the Russian economy. That’s why, before making a traditional year-end economic forecast for the subsequent year, we make an explicit forecast for the Russian oil and gas sector. Current trends in oil and gas have a major influence on the domestic economy,...

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Expect CBR to stay on hold tomorrow
RUSSIA ENERGY / FINANCE - In Brief 13 Dec 2018
Tomorrow will be the last meeting of the CBR´s Board of Directors this year. The meeting will be accompanied with the update of macroeconomic forecasts. At the moment there is no general consensus one the decision. Some expect CBR to stay on hold. Others call for a 25 bp hike, to 7.75%. RUONIA fu...

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October inflation data decreases probability of a rate hike in December
RUSSIA ENERGY / FINANCE - In Brief 09 Nov 2018
This week Rosstat published October CPI data. Headline inflation for the month was +0.4% m-o-m (+3.5% y-o-y). Food prices increased +0.6 m-o-m% (+2.8% y-o-y), mainly due to increase in prices for meat (+1.2% m-o-m) and cereals (+1.5% m-o-m). Rather surprisingly there was continued deflation in ve...

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CBR’s meeting: +25 bp; FX purchases for Minfin will be postponed till 2019
RUSSIA ENERGY / FINANCE - In Brief 14 Sep 2018
CBR decided to increase the key rate by 25 b.p. on today's meeting. The move was already priced in by the markets so monetary authorities basically had no other option but to deliver. General sentiment of the press-conference was pretty hawkish as Governor Nabiullina was trying to show that centr...

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Lean years ahead
RUSSIA ENERGY / FINANCE - Forecast 04 Sep 2018
The Russian economy stabilized in 2017-2018, but isn’t on track for sustainable high growth. The positive impact of higher oil prices is being tempered by a new round of already-introduced and expected sanctions. Dubious domestic structural policy is another negative factor. The new governmen...

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Fears of new sanctions, Turkey and ‘Belousov list’ put pressure on RUB
RUSSIA ENERGY / FINANCE - In Brief 15 Aug 2018
RUB lost almost 5% last week based on fear of new US sanctions and negative EM sentiment. On August 2 a bipartisan group of U.S. senators has introduced a package of measures designed to protect "The Defending American Security from Kremlin Aggression Act of 2018 " (DASKAA). The bill proposes a l...

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Changes in the fiscal policy in 2019-21: Minfin’s view
RUSSIA ENERGY / FINANCE - In Brief 15 Jul 2018
Ministry of Finance published its traditional draft version of “Main directions of the fiscal policy of 2019-2021” (ONBP). The documents sets general overview of fiscal policy measures in the next three years. It also contains estimates of effects of changes in the policy. The general conclusion ...

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The World Cup 2018: How much optimism is justified?
RUSSIA ENERGY / FINANCE - Report 03 Jul 2018
Russia is hosting the football World Cup these days and doing it pretty well, according to everyone. In this report we estimate the costs and benefits for the Russian economy associated with the World Cup. The headline cost figure is $13 bln, which is close to the 2014 Brazil cost ($15 bln). ...

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Changes to the pension system and VAT rate increases are negative for long-term growth
RUSSIA ENERGY / FINANCE - In Brief 21 Jun 2018 1 response
The Government introduced two bills to the Duma last weekend when the country diverted its attention to the World Cup. The first one proposes gradual increase in the retirement age. From 2019 to 2034 the Government intends to increase the retirement age to 65 years for men and 63 years for women....

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Surge in gasoline prices and EM volatility will keep CBR on hold in the June meeting
RUSSIA ENERGY / FINANCE - In Brief 13 Jun 2018
The CBR meeting on monetary policy will take place on June 15. Current consensus (and we agree with it) is that monetary authorities will keep the key rate unchanged. The May’18 CPI report showed that inflation stayed at historic lows (+2.4% y-o-y). The monthly increase in CPI was +0.38% m-o-m un...

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Weak growth = No free fall
RUSSIA ENERGY / FINANCE - Presentation 08 Jun 2018
Economic stagnation continues in the wake of the sanctions, but previous slow growth means there won’t be a free fall in activity. We expect a fiscal surplus in 2018.