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COUNTRY INSIGHTS

Russian budget: medium-term budget plan – policy to stay, only the numbers to change
RUSSIA ECONOMICS · Report · 13 Oct 2021

In September, the government submitted the 2022-2024 rolling budget to the Duma along with the estimate of the budget execution in 2021 and the medium-term economic outlook. The government has usually been very conservative in its estimates and frequently drafted the budget with a deficit, but th...

Federal budget surplus soars amid high price of oil and rising inflation
RUSSIA ECONOMICS · In Brief · 12 Oct 2021

The federal budget surplus reached R0.367 trln and R1.444 trln in September and 9M21. The government collected 95.5% of the formally approved 2021 budget plan already in 9M21. Oil-and-gas tax collection during this period exceeded the annual plan by 3.3%, while high inflation helped collect 91.9%...

Current account was historically strong in 3Q21
RUSSIA ECONOMICS · In Brief · 11 Oct 2021

The Central bank reported that in 3Q21, the current account widened to a historical record of $40.8bn, which was almost half of its entire 9M21 value ($82.2 bn). Previously the strongest ever current account was recorded in 1Q18 ($39.0 bn) and 1Q08 ($38.0 bn). Usually, imports are low early in th...

OFZ: manageable near-term issuance target, ambitious long-term plan
RUSSIA ECONOMICS · Report · 07 Oct 2021

Russia’s Finance Ministry released its tactical (for 4Q21) and strategic (for 2022-24) borrowing plans last week. The former looks quite moderate (R505 bln), while the latter remains ambitious (R3.6 trln annually). Nevertheless, the cash position of the government is still comfortable, which allo...

Populist policy to keep inflation elevated over the next months
RUSSIA ECONOMICS · In Brief · 07 Oct 2021

According to Rosstat, inflation in September reached 0.60% m-o-m - inflation YTD, and y-o-y reached 5.32% and 7.4%. Inflation in seven days ending October 4 was at 0.26%. Out of it, 0.15%, Rosstat allocated to the first four days of October. In September, prices started to grow across the board, ...

Economic growth moderates in August
RUSSIA ECONOMICS · In Brief · 04 Oct 2021 · 1 response

Rosstat reported that basic sector output (industry, agriculture, construction, transport, trade combined) was up y-o-y by 4.0% and 6.4% in August and 8M21. Growth in August was relatively slow due to negative y-o-y growth in Agriculture (-10.1%) as harvesting season this year started later than ...

Inflationary pressure to remain high in 4Q21
RUSSIA ECONOMICS · In Brief · 01 Oct 2021

Rosstat reported that inflation w-o-w was 0.29% in seven days ending September 27. Inflation reached 0.49% and 5.20% MTD and YTD, which is above expectation. In September, inflation y-o-y will well exceed 7.0%, prompting the CBR to raise the key rate further.Inflation remains high as budgetary ex...

Russian macro: the ruble’s dependence on oil to increase if the latter climbs further
RUSSIA ECONOMICS · Report · 27 Sep 2021

As the oil price has climbed close to $80/bbl, and it cannot be ruled out that the upward trend will continue, the ruble has remained relatively weak and has not yet appreciated to below USD/RUB 72. With the oil price fluctuating between $70 and $75/bbl the USD/RUB exchange rate fluctuated within...

​Inflation remains elevated despite growing domestic manufacturing as the domestic demand expands faster amid election-related stimulus
RUSSIA ECONOMICS · In Brief · 23 Sep 2021

The Russian industrial output continued to grow in August relatively fast y-o-y as in 8M21, and in August alone, it was up by 4.5% and 4.7% accordingly. As it happened every month in the past, Rosstat revised up previously published data for July and at the same time reported that seasonally adju...

OFZ: Minfin becomes less aggressive on the primary market
RUSSIA ECONOMICS · In Brief · 22 Sep 2021

This week the Finance Ministry offered the market a preliminary fixed amount of OFZ (R15 bln), the first time since the middle of July. During the previous auctions, the supply was not limited and the borrower made the decision regarding the size of the placement after collecting the orders. Toda...

Russia’s political/pandemic update: United Russia wins constitutional majority ahead of 2024 presidential election
RUSSIA ECONOMICS · Report · 22 Sep 2021 · 1 response

As time goes by, Russia is still among the least vaccinated countries in the world, and the vaccination process in the country remained slow in August and September – only 32.3% of Russians had gotten at least one dose of the vaccine, and 28.2% were fully vaccinated as of September 22. The daily ...

Russian macro forecast: Growth model to evolve – investment to play a greater role
RUSSIA ECONOMICS · Forecast · 15 Sep 2021

In 2021 as a whole, Russia's GDP will well exceed its pre-pandemic level as, having contracted by 3.0% in 2020, its growth this year can reach 4.2-4.3%. This will require a rather unusual and strong q-o-q growth in 3Q21 and 4Q21, which in not impossible as the services sector has potential to exp...

OFZ: In stand-by mode
RUSSIA ECONOMICS · Report · 14 Sep 2021 · 1 response

The CBR’s hawkish message is likely to put a pause on the inflow of international investors’ funds into the OFZ market. The yields in the long end of the curve remain attractive in real terms, especially in anticipation of a potential cut of the inflation target by the regulator, but the moment t...

As Duma elections approach expenditures grow well above the plan, but the federal budget remains in surplus
RUSSIA ECONOMICS · In Brief · 12 Sep 2021

The Finance Ministry reported that in 8M201 the federal budget was in surplus above R0.9 tln. In August alone expenditures exceeded revenues by a small margin (R0.1 trln) mostly since the government started allocating one-off payments to servicemen and military (followed in September by similar o...

Russia’s current account widens to the highest level in eight years
RUSSIA ECONOMICS · In Brief · 09 Sep 2021

The CBR reported its preliminary estimate of the 8M21 current account and foreign trade balance. The current account widened to $69.7 bn, which was the highest level in eight years, as the CBR revealed. The trade balance reached $106.4 bn due to increased energy prices and increased volumes of en...

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