The Lastest Macroeconomic News
28.03.2023 14:35 Retail revenue in Russia may increase in 2023
In 2022, the economic downturn in Russia, as a result of Western sanctions, led to an increase in the volume of trade in essential goods and products. At the same time, retail sales declined overall. Sales of non-food items were particularly hard hit. Some sectors experienced significant declines, while others were less affected. This, however, did not greatly affect the marginality of the business, analysts say. Rosstat reported that in 2022, the decline in retail sales was 6.7% year-on-year. The figure was lower than during the coronavirus pandemic, including the lockdown in the spring of 2020. Analysts at Bloomberg Economics note that retail sales have struggled to recover after falling back in 2014. The sector was also one of the hardest hit during the reporting period. Currently, retail sales account for up to half of Russia`s GDP, and the state of retail is very important for the country`s economy as a whole. Consumer sentiment is critical to growth. Meanwhile, in recent years, against the backdrop of economic uncertainty, people are increasingly trying to save and spend their money only on the bare necessities. As a result, retail sales have declined, a trend analysts predict will continue into the first half of 2023. In the second half of the year, as it is predicted, as the situation in the Russian economy stabilizes, supplies are established and inflation decreases, the non-food sector will begin to recover, which will positively affect retail sales in general.
25.03.2023 20:25 The Ministry of Economic Development of Russia raised the forecast for economic growth in 2023
The Russian Ministry of Economic Development raised its economic growth forecast for 2023 from a fall of 0.8% to some slight growth in the range of 0.1% to 0.2%, Minister Maxim Reshetnikov said March 24. "We confirm that our expectations for this year are positive, we expect significant growth, based on indicators related to economic development, investment, improved forecasts for household incomes," the minister said. The Central Bank of Russia (CBR) also raised its forecast for 2023 last month from a reduction forecast to a more optimistic range of -1% to +1%. Earlier, the International Monetary Fund (IMF) also last month raised its 2023 forecast from a contraction to a statement that Russia`s economy will grow 0.3% in 2023 as it expects oil exports to remain largely unaffected by sanctions. The Russian economy weathered the sanctions much better than expected, analysts say, as it successfully redirected much of its trade from the West to the East.
23.03.2023 12:42 2022 was a record year for the construction industry in Russia
In 2022, one of the successful stories in Russia was the residential real estate sector. This is the sector of the economy that stimulates the development of many related industries and has the largest multiplier effect. Because the sector is highly localized, it is far less dependent on external markets than many other industries. This applies to the supply of both equipment and materials, components and semi-finished products. According to experts, the construction sector in Russia may well be focused on domestic production. Import substitution issues remain in terms of electrical equipment, tools and construction equipment, as well as paints and varnishes and some other components. However, in general, the construction industry in the Russian Federation is in good condition. The last year was a record year for the construction sector in absolute terms. Across the country, 102.6 million square meters were put into operation, including both multi-apartment and private houses. The indicator increased immediately by 11% compared to 2021. It turned out to be 27% higher than the average value for 2015-2020, twice as much as in 2005-2007 and three times exceeded the rate of the beginning of the 2000s. The effect was achieved mainly due to the rapid growth in the first half of the year.
19.03.2023 14:02 The Central Bank of the Russian Federation left the key rate and forecasts unchanged
The Council of the Central Bank of the Russian Federation at its regular meeting on monetary policy, held on March 17, decided not to change the key interest rate, leaving it at 7.5%. The bank retained tough language, but abandoned tougher action. Experts expected such a decision from the regulator. Prior to this, in February, the Bank of Russia also did not change the rate, leaving it unchanged for the fourth time in a row. Then the regulator did not give in to pressure from the Kremlin and did not begin to soften the policy in order to accelerate economic growth. Instead, the Central Bank of the Russian Federation issued a significantly tougher forecast for Russia`s economic prospects this year and warned of an increase in the budget deficit. In March, the bank repeated the same wording. The Central Bank of the Russian Federation reported that over the past month, inflationary risks have not changed significantly. At the same time, the bank maintained its previous forecast for consumer price growth in 2023 at the level of 5-7%, and in 2024 - about 4%. It was again stated that if the risks of inflation increase, the bank will consider the issue of increasing the interest rate.
15.03.2023 19:24 Russian inflation falls to 11% in February, analysts not expecting a rate hike in March
Russian inflation figures for February show the rate fell slightly below market expectations at 11% year on year. However, experts predict that it will fall further in March, to the central bank`s target rate of 4% as base effects take hold. Consumer prices also rose less than expected in February, at 0.5% month on month (compared to the forecasted 0.7%), and significantly less than the previous month`s 0.8%. Food inflation in particular declined, dropping to 9.3% y/y as prices rose only by 0.8% m/m. The overall y/y inflation rate decreased from 11.8% to 11%. Prices for goods were also relatively soft, with a 0.1% m/m decline. Non-food goods prices were particularly stagnant, having remained flat since mid-2022. This is weaker than usual, and household equipment prices in particular continued to decline, with TV and radio prices falling another 4.4% m/m and down 13.3% y/y. Services inflation, however, was stronger at 0.7% m/m, although the y/y rate still decreased to 13.0% after two consecutive increases.
04.03.2023 12:15 Business activity in the Russian services sector increased significantly in February
The PMI index, calculated for the service sector in Russia, in February exceeded 50 points for the first time in 5 months. This was reported on Friday, March 3 by S&P Global. The value of the indicator amounted to 53.1 points, which is significantly higher than 48.7 points in January. A significant increase in the indicator in February indicates a significant increase in business activity in the area under study, according to the report. The PMI Composite Index, which measures the business activity of all private companies operating in the Russian economy, rose from 49.7 to 53.1 on the back of a sharp rise in industrial production and a resumption of growth in services production. Growth and decline are separated by 50. Earlier it was reported that the indicator for the Russian industry in February grew at the fastest pace in 6 years, which was facilitated by an increase in both current production volumes and new sales. The indicator for the industry reached 53.6 points, which is 1 point more than the previous month.
03.03.2023 12:19 The situation in the manufacturing industry in Russia continued to improve in February
According to the latest PMI report from S&P Global, Russian manufacturing companies saw a further improvement in working conditions in February, with growth at the highest pace since the beginning of 2017. Despite the effects of the sanctions, the manufacturing sector ended 2022 with historically strong production growth. The index of business activity in the manufacturing sector in January 2023 continued its positive trend. Also in February, the seasonally adjusted S&P Global Russia Purchasing Managers` Index (PMI) in the manufacturing sector was 53.6 in February, compared to 52.6 in January and above the 50.0 mark, unchanged, indicating growth. “The latest data showed a significant improvement in the state of the Russian manufacturing sector, and this was the most noticeable in just over six years. The rise has extended the current growth sequence to ten months,” the report says.
16.02.2023 15:23 EBRD maintains forecast for Russia`s GDP contraction by 3% in 2023
According to the updated EBRD estimate, Russia`s GDP in 2022 decreased by 3.5%. The bank`s previous forecast, made in September 2022, spoke of a possible decrease in this indicator by 5%. At the same time, the EBRD maintained its forecast for GDP in 2023 - a contraction of 3%. This forecast differed greatly from the estimates of other international and Russian organizations. Heated debate over the prospects for the Russian economy this year flared up after the IMF issued a rather controversial forecast for 2023 in February, according to which the country`s GDP should grow by 0.3%. This figure is better than that of countries such as the UK and Germany. The Central Bank of the Russian Federation is more cautious in its estimates - GDP growth from -1% to +1%. As experts say, in this way the bank hedges rates. The Ministry of Economy and the Ministry of Finance of Russia as a whole predict about the same outcome - a decrease of -0.8% and -0.6%, respectively. There are still no final data on Russia`s GDP for 2022 as a whole, but the estimates are much lower than the forecast for the current year.
15.02.2023 15:17 Industrial production in Russia was resilient in 2022 thanks to government spending
The volume of industrial production in Russia in 2022 fell by 0.6% year on year in 2022, according to the latest data from Rosstat. In December 2022 alone, the industry contracted 4.3% yoy, in line with expectations, and showed a seasonally adjusted 0.1% m/m growth compared to 0.7-0 growth .8% in October-November. Despite the effects of the sanctions, the manufacturing sector ended 2022 with historically strong output growth, according to IntelliNews analysts. The PMI in the manufacturing sector in January 2023 continued its positive trend, being above 50 points. However, the continuing gap between services and manufacturing suggests that light and heavy industries can be supported by increased government spending.
30.01.2023 18:48 The state of the Russian economy in 2022 turned out to be significantly better than forecasts
Russia`s GDP fell just 2.5 percent in 2022, a far cry from the 30 percent drop that leading analysts warned about at the beginning of the year. Estimates by international organizations are just around the corner: the IMF, the World Bank and the OECD estimate the decline in Russia`s GDP in 2022 in the range of 3.4% to 4.5% of GDP. Thus, things in the Russian economy turned out to be much better than expected.
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