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Russia: a brief market watch
RUSSIA ECONOMICS · In Brief · 31 Aug 2023

The CBR's decision to hike the key rate to 12% in mid-August immediately moved the ruble from about R/$101 to R/$93. Markets expected a more moderate CBR move (+200-250 bps), and some overshooting was understandable. By the end of the month, the ruble moved to above R/$ 95. A significant increase...

Russian industry continues to expand, albeit annual growth decelerates
RUSSIA ECONOMICS · In Brief · 29 Aug 2023

Rosstat reported that industrial output grew y-o-y by 2.6% in 7M23, which was higher than 2.2% in 1H23. At the same time, industrial y-o-y growth decelerated in July to 4.9% (from 6.7% and 5.8% in May and June). Of course, there were strong base effects several months ago - amid a low 2Q22 base. ...

Russian macro: the ruble - back to a normal trajectory
RUSSIA ECONOMICS · Report · 18 Aug 2023

After the Russian Central Bank hiked the key rate a few days ago, the ruble bounced back to the low USD/RUB 90s area, which currently seems a sort of comfortable equilibrium zone for the exchange rate. The CBR mentioned accelerating inflation as the main reason for the key rate hike, which seems ...

Russia: a brief market watch
RUSSIA ECONOMICS · In Brief · 16 Aug 2023

The rapid depreciation of the ruble became the main event in the past weeks (especially at the end of last week). Since the start of the month, it moved by more than 10% by August 15 (from R/$91.6 to $/R101) and encouraged the authorities to act. As a result, the CBR called for an extraordinary B...

Economic growth in 2Q23 slightly exceeded expectations
RUSSIA ECONOMICS · In Brief · 14 Aug 2023

Rosstat reported that the country's GDP grew by 4.9% y-o-y in 2Q13. It was a flash estimate with no details. In a few weeks Rosstat will provide more color on 2Q23 economic growth, including nominal GDP numbers, including its sectoral structure, etc. Moreover, it may even update the aforementione...

Russian macro: thriftier economic growth amid currency “detoxication”
RUSSIA ECONOMICS · Report · 11 Aug 2023

The Russian economy continues to adapt to the new environment, and this adaptation will help it grow this year – possibly at 2.5%, with some potential upside. Although this year’s growth outlook doesn’t look impressive after last year’s GDP contraction by 2.1%, it seems more or less comparable wi...

Monthly current account surplus continues to narrow
RUSSIA ECONOMICS · In Brief · 09 Aug 2023

The CBR published an estimate of some parameters of the 7M23 balance of payments. The current account surplus accounted for $1.8bn and $25.2bn in July and 7M23, implying that its monthly value continued to narrow. In 1Q23 and 2Q23, the current surplus accounted for $14.8 bn and $8.6 bn. The trade...

The budget deficit remains moderate
RUSSIA ECONOMICS · In Brief · 08 Aug 2023

Minfin reported that in 7M23, the federal budget deficit reached R2.8 trln. It was slightly up from R2.6 trln in 1H23. In 4M23 and 5M23, the budget deficit was higher (over R3.0 trln) as this year, the government allocated budgetary expenditures spending in a rather unusual fashion, having spent ...

Russia: a brief market watch
RUSSIA ECONOMICS · In Brief · 03 Aug 2023

In the past two weeks, the ruble has continued to depreciate against major global currencies. On the first days of August, a month which is traditionally associated with greater volatility on Russia's financial markets, it at some point surpassed the R/$94 level, which was last observed in March ...

The economy looks decent in 1H23, albeit inflation accelerates
RUSSIA ECONOMICS · In Brief · 02 Aug 2023

Rosstat reported that the output of the five basic sectors grew y-o-y by 8.9% and 3.3% in June and 1H23. Earlier Rosstat reported that industry was up by 6.5% and 2.6% over the same periods (also y-o-y). Agricultural output grew by 2.6% and 2.9% (same periods, also y-o-y). These numbers don’t loo...

Russian macro: industry to grow steadily in 2023, but capacity issues may hamper future growth
RUSSIA ECONOMICS · Report · 28 Jul 2023

Rosstat reported that Russia’s industrial output increased by 2.6% y-o-y in 1H23, by 6.3% in 2Q23 and by 6.5% y-o-y in June alone. Recall that industrial output contracted by 0.9% y-o-y in 1Q23. There are still strong base effects associated with last year's 1H22 shock caused by the special milit...

Russia: a brief market watch
RUSSIA ECONOMICS · In Brief · 20 Jul 2023

The new attack on the Crimea bridge and the termination of the "grain deal" made investors nervous again, which prevented the ruble from moving below the R/$90 benchmark. At the same time liquidity in the banking sectors is shrinking, and the cost of funding is rising. The latter means that in th...

The current account narrows in 2Q23 but could widen in 3Q23 amid a weaker ruble, while the latter will support budgetary revenue
RUSSIA ECONOMICS · In Brief · 12 Jul 2023

The CBR reported that Russia's current account surplus narrowed to $5.4 bn in 2Q23 from $20.2 bn in 1Q23. The regulator also mentioned that in June alone, the current account surplus turned negative. Note, that these data are very preliminary and will be revised in the future. Nonetheless the 2Q2...

Russia political pandemic update: Perplex, perplex, perplex
RUSSIA ECONOMICS · Report · 06 Jul 2023

After nearly a year and a half since the start of the special military operation, it looks as though its timing and outcome are becoming less and less clear and obvious. Russia’s standoff with the West is set to last for generations, and what now happens in Ukraine might look secondary for histor...

Russia: a brief market watch
RUSSIA ECONOMICS · In Brief · 06 Jul 2023

The attempted military coup accompanied by a further escalation in Ukraine (with some media speculation about a potential “incident” at the nuclear plant) pushed the ruble exchange rate down. Ruble reached the R/$90 mark for the first time since March 2022. The narrowing of the current account su...