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COUNTRY INSIGHTS

Russian growth in 2020-2021: a relatively smooth trajectory, albeit uneven across sectors
RUSSIA ECONOMICS · Forecast · 23 Jul 2020

Last month some international organizations such as the World Bank, OECD, IMF, updated their 2020-2021 forecasts and turned less optimistic. The global recession in 2020 is now seen a bit deeper, while the rebound in 2021 looks less robust and more prolonged. Russia looks quite unimpressive amid ...

The Russian economy in 1H20: Strong rebound in some sectors in June, a few others to catch up
RUSSIA ECONOMICS · In Brief · 17 Jul 2020

Rosstat reported that retail trade bounced back in June by 15.8% m-o-m (not seasonally adjusted) which pulled y-o-y figure to -7.7%, i.e., well above the initially reported -19.1% and -23.2% May and April figures. The 1H20 y-o-y tally was down by 6.4% with prospects of some recovery in 2H20. The ...

Russia’s growth and finance: dependence on oil price muted, growth trajectory unclear, balance sheets little shaken
RUSSIA ECONOMICS · Report · 13 Jul 2020

As the oil price rebounded in May, hovered around $40/bbl in June, and ascended a bit more in early July, the debate as to whether economies can return to their pre-pandemic growth trajectories was renewed in many countries despite high uncertainty. In some sense, Russia is lucky as this debate o...

Current account surplus narrowed in 2Q20 but is set to widen in 2H20
RUSSIA ECONOMICS · In Brief · 10 Jul 2020

The Russian Central Bank reported that in 1H20, the current account surplus was at $22.3bn, which was a little different from the surplus in 1Q20 ($21.7). This implies that in 2Q20, the current account surplus was at near-zero ($0.6bn). Note that these estimates are preliminary and may change goi...

Inflation accelerated but with no surprise
RUSSIA ECONOMICS · In Brief · 09 Jul 2020

Rosstat announced that in June inflation accelerated to 3.2% y-o-y, as it reached 0.2% m-o-m. This acceleration looks moderate, as retail sales seemingly started to recover as of lockdown restrictions have been eased. Note that in June 2019, monthly inflation was at zero. It was rather unusual fo...

Russian political and pandemic update: In search of a new normal
RUSSIA ECONOMICS · Report · 06 Jul 2020

Recent reports suggest that Russia’s daily numbers of those newly contaminated with COVID-19 continued to fall slowly but steadily in June and in early July. The recovery ratio in Russia remains high, and the total number of people who have recovered has exceeded the current number of “active cas...

Minfin's 3Q20 borrowing plan remains ambitious
RUSSIA ECONOMICS · In Brief · 01 Jul 2020 · 1 response

The Russian Finance Ministry announced its borrowing plan for 3Q20, which assumes the issuance of OFZ worth of R1 trln. This figure can help to estimate the aggregate amount of the placements for FY’20 as traditionally, the government targets a rather even quarterly allocation of borrowing during...

IMF downgrades global and Russia’s growth, while Russia keeps muddling through in May
RUSSIA ECONOMICS · In Brief · 25 Jun 2020

As IMF downgraded its 2020 global growth forecast to -4.9% (down from -3.0% previous forecast) Russia couldn’t remain unaffected. It now appears that the Russian GDP is set to shrink by 6.6% this year (down from -5.5%). IMF sees Russia doing better than the US (GDP down by 8.0%) and the EU (-10.2...

Low demand for 1-year REPO can push OFZ yields higher
RUSSIA ECONOMICS · In Brief · 22 Jun 2020

Today the CBR held its first long-term REPO auction and offered commercial banks 1-year loans up to R400 bln at a floating rate (equal to the key rate plus 25 bps). The aggregate demand was only R5.1 bln, which is definitely below market expectations. GKEM Analytica can offer several possible exp...

The economy is hit but withstands the pandemic pressure
RUSSIA ECONOMICS · In Brief · 19 Jun 2020

Rosstat released preliminary estimates of major economic indicators in May and 5m20 and most of them don’t look too bad given the current circumstances. A few days ago, GKEM Analytica already mentioned that even though manufacturing contracted in May, this contraction was as deep as in most Europ...

The economy may have bottomed in April-May
RUSSIA ECONOMICS · In Brief · 16 Jun 2020

Rosstat reported that industrial production decreased in May and 5m20 by 9.6% and 2.4% y-o-y. In the mining sector respective figures stood at -13.5% and -3.4% y-o-y, while in manufacturing it was not that deep (-7.2% and -1.4% y-o-y respectively). Note that in April contraction in manufacturing ...

Ruble sovereigns: Еxisting market capacity not very large
RUSSIA ECONOMICS · Report · 16 Jun 2020

The Russian Finance Ministry is very close to setting a new quarterly record in terms of primary OFZ placement. To beat the previous one, the government needs to raise about R12 bln during the next two auction days. However, even a successful second quarter is not enough to cover all the financin...

Current account surplus widens in May and is set to remain strong in June
RUSSIA ECONOMICS · In Brief · 11 Jun 2020 · 1 response

CBR reported that Russia’s current account and trade surpluses widened in 5m20 relative to 4m20 and reached $28.9bn and $43.2bn (from $23.5bn and $35.6bn as CBR estimated earlier these two surpluses for 4m20). This means that in May the trade surplus unsurprisingly widened in May to $7.6bn as the...

Russian macro: Oil near breakeven price - FX interventions to subside, ruble moving toward equilibrium
RUSSIA ECONOMICS · Report · 09 Jun 2020

As oil prices continued to climb in recent weeks, and the Urals blend price exceeded $40/bbl on June 8, the Russian ruble appreciated to below 70 per USD. In early June, the Ministry of Finance announced its daily FX interventions plan, which can only strengthen the ruble in the current environme...

Russia pandemic update: Looking for herd immunity and becoming less affected
RUSSIA ECONOMICS · Report · 01 Jun 2020

In the past two weeks, the daily number of confirmed cases has fluctuated between 8K and 10K, and its rate of growth decelerated from over 4% closer to 2%. The disease spread has seemingly stabilized in Russia. It cannot be ruled out that the new “generation” of viruses is now less aggressive tha...

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