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Budget and growth: Russia’s 2020 budget spending depends on its ability to borrow
RUSSIA ECONOMICS · Report · 14 Sep 2020

Rosstat reported that Russia's GDP was down by 8% in 2Q20 and provided the GDP sectoral breakdown by production. A month ago, when Rosstat announced its flash estimate of 2Q20 GDP, the decline was a bit deeper – 8.5%. Ongoing upward revisions are generally in line with our long-standing view that...

The CBR plans to publish the anticipated long-term trajectory of its key rate
RUSSIA ECONOMICS · In Brief · 10 Sep 2020

Today CBR published the draft of the “Key directions of the monetary policy in 2021-23”. In addition to updating macroeconomic projections and introducing various scenarios of the development of the Russian economy, the regulator indicated that it is almost ready to start forecasting and publishi...

No deflation in August, by year-end inflation is likely to exceed 4%
RUSSIA ECONOMICS · In Brief · 04 Sep 2020

Rosstat reported that m-o-m inflation was at 0% in August, even though some deflation due to seasonal factors was earlier expected. Even though prices of fruits and vegetables fell, so that food prices in total were down by 0.9% m-o-m, and by 1.0% y-o-y, it was not enough to offset increased pric...

Russia’s political and pandemic update: Russia’s alienation to deepen amid Navalny saga
RUSSIA ECONOMICS · Report · 04 Sep 2020

As the number of confirmed COVID-19 cases in Russia exceeded 1 mln people, while Russian economic performance has improved in recent months, Russians became a bit more optimistic in August, even though the daily numbers of newly infected people stopped declining in mid-August and fluctuated below...

Russian financial markets: retail investors looking for foreign assets
RUSSIA ECONOMICS · Report · 28 Aug 2020

The rapid decrease of interest rates in both Russia and the US in the first half of the year fueled the inflow of private investors’ money from banking deposits into the financial markets. As a result the aggregate amount of household funds in brokerage accounts and in asset management companies ...

Russian economy and finances: economy gradually improves, markets to stabilize
RUSSIA ECONOMICS · Report · 24 Aug 2020

As several sectors of the economy saw relative improvements in July, such as the strong m-o-m rebound in retail sales that continued to raise consumption following a deep fall reported in April, and better performance in manufacturing, the Economics Ministry estimated that Russia’s GDP contracted...

Economy continued to recover in July, performance differed across sectors
RUSSIA ECONOMICS · In Brief · 20 Aug 2020

Rosstat released preliminary statistics on major economic indicators for July, which confirm that the Russian economy is on a recovery track, even though this recovery is not uniform across sectors.Agriculture was up 4.0% y-o-y last month, which brought the 7m20 tally to 3.3% versus 3.0% in 1H20....

Finance Ministry cancels OFZ placement this week
RUSSIA ECONOMICS · In Brief · 18 Aug 2020 · 1 response

The Russian Ministry of Finance authorities decided not to conduct OFZ primary placement this week. To remind, last week the Finance Ministry failed to attract enough demand at reasonable yield and canceled the placement. This week the cancelation was made in advance. During the last three weeks ...

Russia's industrial performance looked encouraging in July amid some improvements in manufacturing
RUSSIA ECONOMICS · In Brief · 17 Aug 2020

In the aftermath of some break caused by the lockdown in April and May, the Russian industry performed reasonably well in July. Though, mining was still under pressure due to deep contraction in oil production stipulated by the OPEC+ deal. Rosstat reported that oil and gas extraction in July was ...

Federal budget deficit widened in July amid increased spending
RUSSIA ECONOMICS · In Brief · 12 Aug 2020

The Russian federal budget deficit widened in July so that the 7m20 tally reached R1.5 trln as in 1H20 it was slightly over R1.8 trln. Expenditures in July exceeded R2.0 trln while in 1H20 average monthly expenditures stood below R1.7 trln. As is happens regularly, the Finance Ministry releases p...

“Moderate” GDP contraction in 2Q20 sets the potential for an upside revision of economic performance in 2020 as a whole
RUSSIA ECONOMICS · In Brief · 11 Aug 2020

Rosstat reported that in 2Q20 the Russian GDP was down by 8.5% y-o-y. It was a preliminary flash estimate, and no other details were provided. The figure is in line with GKEM Analytica’s view that in 2020 GDP may contract by around 4% and even less if some underestimated activities, such as onlin...

Solid balance of payments in 2020, additional support secured in 2021 by amended double taxation treaties
RUSSIA ECONOMICS · In Brief · 11 Aug 2020 · 1 response

As the Russian government continues fine-tuning of its taxation system, move to renegotiate with several countries agreements on avoidance of the double taxation looks natural and reasonable. Earlier the government decided to impose a 15% tax on interest on bank deposits (if total deposits of an ...

Russia’s pandemic and political update: Dull scenery puzzles the audience
RUSSIA ECONOMICS · Report · 03 Aug 2020

In July, Russia’s pandemic situation evolved in the same fashion as a month ago. The number of newly infected people continued to subside, albeit very slowly, while the number of active cases fell from over 245K people in mid-June to around 184K in early August. The number of daily new cases fell...

The ruble: seasonal weakness
RUSSIA ECONOMICS · In Brief · 03 Aug 2020

In the past several weeks, the Russian ruble underperformed many other EM currencies. At the same time, Russia's fundamentals didn’t change significantly. As monthly foreign trade surplus is relatively small (in June it can be estimated at $4.2bn and in July should not yet differ much) the exchan...

Russia: The key rate cut, but CBR plans may become muted
RUSSIA ECONOMICS · In Brief · 27 Jul 2020 · 1 response

he Russian Central Bank cut the key policy rate by 25 bp to 4.25% and released its updated macroeconomic forecast along with some thoughts and interpretations of the ongoing developments. Generally, this updated forecast doesn’t differ much from GKEM Analytica's forecast published last week. Howe...

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