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24.07.2020 10:59 Russia: Consumption shows improvement, but income trend uncertain

The retail trade drop narrowed in June, possibly supported by the lack of international travel. Income fundamentals appear solid at first glance but mask a higher share of grey income and increased dependence on state support. Russian retail trade drop narrowed from -19.2% year-on-year in May to -7.7% YoY in June, outperforming the consensus forecast of -11.0% and our -11.5% expectations. The improvement was seen in both the food and non-food retail segments, and support factors include the wide lifting of lockdowns ahead of the constitutional voting in the last week of June, combined with persistent foreign travel restrictions. The latter may soon be somewhat relaxed to a limited extent, which means that local consumption may continue to see some boost during the summer months. In 3Q last year Russians spent US$16.5bn on foreign travel, which means that this quarter the consumption of goods and services might receive around a 5-10% boost

17.07.2020 18:23 Russia: Industry still sluggish, signals weak investment trend

Russian industrial output dropped in June due to the sluggish performance in intermediary and investment sectors. With fiscal priorities shifting towards social spending, consumer demand-driven sectors are less of a concern in the near term. Manufacturing sector underperforms despite favorable calendar effect and recovery in consumer-driven sectors. Russian industrial production dropped 9.4% year-on-year in June, showing little improvement vs. the 9.6% YoY drop in May. The June result is worse than the -7.2% consensus and is even further away from our more optimistic expectations of -6.0%. The negative result comes despite the favorable calendar effect. Even accounting for the extra day-off, the number of working days in June 2020 was still exceeded by that of June 2019 by 1 day, while the calendar effect for May was exactly the opposite. July and August will be facing adverse calendar effects of 1 lost working day each. The June 14.2% YoY drop in commodity extraction (after -13.5% YoY in May) contributed to the overall performance, however, it was not a surprise given Russia`s OPEC+ commitments, which persist in the current form until August, when some relaxation seems to have been agreed upon recently.

12.07.2020 19:23 Russia: Near-term inflationary risks appear low

Russian CPI accelerated in June, mainly on the base effect. Meanwhile, stabilization of global agriculture, commodity, and FX markets, along with extended limitations on foreign travel, lowers the risk of CPI hitting the 4.0% target this year. Russian inflation accelerated from 3.0% year-on-year in May to 3.2% YoY in June, slightly below our expectations and in line with the consensus forecast. The key reason for this pick-up is due to the low base effect of June 2019 (caused by the freeze in gasoline prices and other temporary factors). In monthly terms, CPI actually decelerated from 0.3% month-on-month in May to 0.2% MoM in June, which is below the 0.4-0.6% MoM seen in June 2016-18. The disinflationary trend observed throughout 2H19 and early 2020 (annual CPI decelerated from 4.7% YoY in June 2019 to 2.3% YoY in February 2020) suggests that the statistical low base effect will remain until 1Q21, optically pushing the annual CPI rates higher despite contained monthly rates.

19.06.2020 19:33 Russia`s Economy Ministry releases fresh forecasts for 2020

Russia`s Ministry of Economy has released a fresh forecast for 2019-2022. The ministry said there will be no V-shaped recovery: after a 5% plunge in 2020, real GDP will only recover starting in mid-2022. The Ministry of Economy predicts GDP growth of 2.8% in 2021 and 3% in 2022. The Urals price stays below the base budget price of $42, at which point the Russian budget breaks even. Urals will average $31.1 per barrel this year, rising to $35.4 in 2021 and only in 2022 will it return to the breakeven price of $42.2 when Russia Inc. goes back into profit. That means the Ministry of Finance will rely on the National Welfare Fund (NWF) to top up budget spending until 2023. Currently there are some RUB9 trillion ($130bn) of liquid assets in the NWF. With an estimated RUB3 trillion shortfall in budget revenues forecast for this year there is therefore enough in the NWF to cover at least another three years of deficits. The ministry also says the ruble will remain relatively strong over the period.

12.06.2020 22:00 Russian government spending on national projects runs low, but 2H20 should see boost

The coronacrisis has knocked back work on Russia`s 12 national projects, causing further interruptions after the programme was plagued by delays in the first half of last year as well. Over the first five months of this year federal spending on the projects was only 28.9% of the annual plan. The programme is existential for the government of Russian President Vladimir Putin, as trust in the president falls after over six years of real income stagnation. Since 2012, the Kremlin has diverted all its resources into modernising the military, sacrificing the growing prosperity the people had been enjoying. But as that goal has largely been achieved since about 2018 the Kremlin has turned its attention back to improving the quality of life of regular Russians in anticipation of growing social disapproval of Putin and his government in the coming years. The national projects are the manifestation of that plan, but got off to a slow start last year and now have been side-tracked by the double oil price and coronavirus shocks. At the same time, the government is keen to get the plans running, as they contain significant spending on infrastructure projects (a third of the total) that will provide a very useful Keynesian boost to the flagging Russian economy, and most of these projects already have funding assigned to them under the current budget.

22.05.2020 12:23 Industrial output in Russia shrank 6.6% in April

Russia`s industrial output fell by 6.6 percent in April compared to the previous year, dampened by the country`s coronavirus lockdown, the state statistics agency said Thursday. Russia imposed a non-working period across the country at the end of April which served as the decisive factor in lowering industrial output, Rosstat said in a statement. Industries were delivered a double blow as President Vladimir Putin ordered companies to stop work activities but continue paying salaries. At the same time, consumer demand fell for a range of goods and services, the agency said. However it reported a surge in demand for some products, including food, household products and laptops, sought as people began telecommuting. Russia`s commodities sector only decreased by 3.2 percent year on year, and oil production actually grew by 0.2 percent, the agency said, noting that for many of those companies ceasing activity was not possible. Pharmaceutical industries showed growth of 13.5 percent year on year, while the automotive sector was the worst-hit, plummeting by 79.2 percent.

14.05.2020 14:35 EBRD: Russia`s GDP In 2020 To Fall By 4.5%

Russia`s GDP will decline by 4.5 percent in 2020 due to lower oil prices and the coronavirus pandemic and in 2021 the Russian economy will grow by 4 percent, the European Bank for Reconstruction and Development (EBRD) said in its Regional Economic Prospects report published on Wednesday. Russia went through a double shock in the first months of the year, those being the COVID-19 pandemic, which paralyzed global oil demand, and the failed OPEC+ deal with Saudi Arabia, which led to a sharp drop in oil prices, according to the EBRD. "With its economy still dependent on oil, the fall in oil prices was significant, particularly in light of the fiscal stimulus needed to offset the impact of the pandemic. The Russian economy is expected to shrink by 4.5 per cent in 2020, followed by a rebound of 4.0 per cent in 2021," the spring report read.

11.05.2020 21:42 Crisis and Freelance: New Survey from Workspace

The COVID-19 pandemic has made significant changes in the economic situation of different countries. From a virus that suddenly burst into our reality, many suffered - someone directly, and someone indirectly. Some changes have also affected the freelance sphere, if only for the reason that many professionals from this area serve just the business that has suffered from quarantines, border closures and other additional conditions. To understand how things are going for people who themselves find work and work exclusively for themselves, Freelance service Workspace conducted another survey and a large-scale study on this topic. The survey, which was conducted at the end of April 2020, was attended by 714 freelancers. These are mainly specialists who are involved in design, copywriting, translation, web development, programming and SMM. The results of the survey provided interesting data, which we propose to familiarize with.

26.04.2020 12:54 Russian industrial companies are struggling with coronavirus restrictions

Russia`s biggest industrial companies make money smelting metal, processing hydrocarbons, mining ore and producing energy. But some of them have been forced rapidly to diversify into building temporary accommodation, making respirator masks and even managing bus services to keep their business running as the coronavirus pandemic bites. Unlike offices with employees that can work from home or retailers that can switch to online delivery, Russia`s vast industrial sector needs both workers who can physically attend production lines and regular shipments of components and materials, presenting companies with safety and logistical issues if they want to maintain output. Business operations across the country`s industrial network of factories, power plants, mines and metalworks have been affected, after Moscow responded to the country`s rising number of cases by declaring a national holiday and restricting the movement of people. While the big mining, metals and oil and gas companies are deemed strategic and therefore exempt from the shutdown, the smaller firms and contractors employed by them have been closed by government decree. This has caused problems all along the supply chain, at the same time that demand has fallen sharply because of shutdowns in the EU and China.

25.04.2020 12:48 Bank of Russia cuts lending rates and expects GDP to decline 4-6 per cent this year

Russia`s central bank cut lending rates on Friday, belatedly joining the global easing trend in an attempt to limit the economic hit from coronavirus, despite the pressure it will put on inflation and the country`s currency. The global slowdown and collapse in oil prices sparked by the Covid-19 pandemic has placed the bank in a bind, caught between wanting to limit the scale of Russia`s economic contraction but also temper inflation and prop up the rouble. The bank cut its key rate by 50 basis points to 5.5 per cent and suggested more cuts could follow, as it forecast Russia`s economy would contract by between 4 and 6 per cent this year because of both the collapse in demand for the country`s raw materials and quarantine measures that have stifled domestic business. It had held rates steady last month, even as other big central banks eased lending costs.


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