The Lastest Macroeconomic News
29.11.2021 14:49 Russia`s industrial production growth accelerated to 7.1% in October
Russia`s industrial production growth accelerated to 7.1% year on year in October from 6.9% in September, which meant output was up 5.0% y/y in 10M21, RosStat reported on November 25. In seasonally adjusted terms, industrial production was up 0.8% m/m in October following 1.8% growth in September. The acceleration in y/y growth was driven mainly by the mining and quarrying sector, which grew 10.9% versus 9.0% in September, driven by an increase in the production of oil and gas (up 8.9%), coal (9.1%) and other natural resources (7.8%), as well as an increase in associated services (up 30.1%). At the same time, growth slowed in manufacturing (to 4.5% from 5.1%), the electricity, gas and heat sector (to 8.0% from 9.6%), and the water and waste management segment (to 6.3% from 11.7%). Within the manufacturing sector, growth remained strong in categories including beverages (13.6% y/y), paper and paper products (9.4%), oil products (11.9%), drugs and medicine (29%), machinery and equipment (17.2%), and transport equipment excluding cars (18.7%). Other segments registered a clear slowdown, including metals (output was flat y/y), metal products (up 2.7%), computers and electronics (down 12.6%), and cars (down 15.8%).
18.11.2021 19:48 The Russian economy grew 4.3% during the third quarter
The Russian economy grew 4.3% y/y during the third quarter, but the post-coronavirus recovery is almost over. The result was close to Sova Capital’s expectation (+4.2% year on year) but below Bloomberg consensus (+4.5% y/y), according to RosStat`s preliminary GDP growth estimate for 3Q21 released on November 17. “The solid 3Q21 figures were likely due to the still strong but waning momentum in retail and wholesale trade, manufacturing, and freight and passenger turnover,” Sova Capital said in a note. At the same time, mining and quarrying along with the financial sector likely did better than in 2Q21, Sova Capital reports. “On our estimates, the economy added just 0.15% SA quarter on quarter in 3Q21 after adding 2.1% SA q/q in 2Q21. The non-working period and partial lockdowns should lead to lower GDP growth in 4Q21 than previously expected, and our forecast is for growth of 1.7% y/y. Our outlook for Russia`s FY21 growth is 3.8%, which is lower than the estimates from CBR (+4-4.5% y/y) and Russia’s Ministry of Economic Development (+4.2% y/y),” the bank said in a note.
08.11.2021 12:18 Inflation in Russia is accelerating and is not yet in line with forecasts
Russian CPI jumped 0.7 percentage points to 8.1% year-on-year in October, exceeding market expectations. The good news is the volatile food segment accounted for 83% of the acceleration. The bad news is that weekly CPI needs to slow down from the current 0.21% to 0.09-0.15% to fit into Bank of Russia's fresh year-end forecast. This looks too optimistic. Russian CPI picked up from 7.4% YoY in September to 8.1% YoY in October, exceeding the market consensus but meeting our expectations. Looking into the numbers, we see both good and bad news.
05.11.2021 14:37 Russia`s service PMI stumbles as fresh wave of the coronavirus epidemic sweeps the country
The seasonally adjusted IHS Markit Russia Services Business Activity Index registered 48.8 in October, down from 50.5 in September, to signal the fastest contraction in Russian service sector business activity since December 2020. The contraction in the services PMI was offset to some extent by a gain in the manufacturing PMI released a few days ago that saw the index rise to 51.6 in October, up from 49.8 in September; the first improvement in the health of the Russian manufacturing sector for five months. Combined the IHS Markit Russia Composite PMI Output Index almost posted a net gain, but fell just shy of breaking above the 50 no-change mark of 50 to post 49.5 in October, down from 50.5 in September. The combined index puts Russia`s private sector business activity back into overall contraction as the post coronacrisis bounce back comes to an end.
03.11.2021 16:42 Russian retail sales surge 5.6% in September on the back of real income growth, savings spending
Retail sales in Russia surged 5.6% year on year in September of 2021, accelerating from a 5.3% increase in the previous month, above market expectations of a 3.8% rise. On a monthly basis, retail sales declined 1.5%, after a 3.4% gain in August. Retail sales turnover added +5.3% y/y in August, with non-food advancing +7.5% y/y and food being up +2.8% y/y. The August print exceeded the Bloomberg consensus estimate of +4.9% y/y. Private consumption recovered strongly in the first half of the year, with seasonally adjusted consumption in the second quarter of the year being the highest ever recorded. This was influenced by e.g. recovery of savings accumulated during corona periods to consumption. Russia`s seasonally adjusted GDP grew by as much as 3.5% in the second quarter from the first quarter. Economic activity has thus clearly risen above pre-pandemic levels.
29.09.2021 14:42 Russia`s Ministry of Economic Development ups GDP growth forecast for 2021 to 4.2%
In preparation for the 2022-24 Russian federal budget, the Ministry of Economic Development released new predictions for macroeconomic indicators from 2021-24, BMB Russia reports. In its forecast, the Ministry predicts GDP growth of 4.2% for 2021, up from the previous forecast of 3.8%, and 3% for 2022-24. However, inflation is expected to get worse. The Ministry expects the growth in consumer prices to be 5.8% in 2021, the highest in five years. Minister of Economic Development Maxim Reshetnikov attributes this to global inflation, the disruption of value chains and poor Russian harvests. The ministry`s inflation prediction is still lower than that of the CBR, which forecasts CPI at 5.7-6.2%. The ministry`s predictions are also at odds with a recent OECD report that puts Russia`s economic growth at 2.7% and inflation at 6.1% for 2021. This is the third version of the forecast by the Ministry this year. “The main thing that served as the basis for revising the forecast is the fact that the Russian economy recovered faster than we had planned,” a representative said. President also recently remarked that Russia has overcome the economic downturn due to the pandemic and that the economy has recovered.
05.09.2021 20:14 Russia`s services PMI goes back into the red
Russia`s seasonally adjusted IHS Markit Russia Services Business Activity Index went into the red in August, falling below the 50 no-change mark to 49.3, down heavily from 53.5 in July as the low base effects wear off, Markit reported on September 3. Russia`s economy is slowing on paper, but the statistics are confusing following the big swings during the last year and half due to the pandemic. However, the forward-looking PMI that is based on panel interviews with business leaders shows clearly that the economic bounce-back effect is coming to an end and growth is cooling as the autumn arrives. Russia`s economy boomed as the coronacrisis started come to an end in the last quarter of 2020 - a process that is not over. What is happening now is a mild correction from a bounce-back overshoot as a new economic balance is established and growth settles back into its long-term projection groove. The seasonally manufacturing PMI index also posted a fall in August to 46.5, down from 47.5 in July, the third successive monthly deterioration in operating conditions across the Russian manufacturing sector. Taken together, the composite PMI output index was also dragged down to below the no-change mark and posted 48.2 in August, down from 51.7 in July, to signal the first decline in Russian private sector business activity in 2021 so far. The fall in output was broad-based by sector.
28.08.2021 17:56 Russia`s industrial production slows to 6.8%
As the low base effects fade, the growth in industrial production (IP) is showing signs of moderating year on year. IP growth in July slowed to 6.8% y/y vs. Bloomberg consensus expectations of 8%. The IP print for July contrasted starkly with the rates of 10.2% y/y and 11.9% y/y reported in June and May respectively. Manufacturing drove the deceleration, up only 3.4% y/y in July vs. 7.6% y/y in June and 12.1% y/y in May. Mining and quarrying grew 11.6% y/y vs. 13.7% y/y in June and 12.1% y/y in May as it continues to recover from OPEC+. Electricity, gas and AC rose 8.5% y/y in July vs. 8% y/y in May-June, while water and sewerage rose 16.7% y/y vs. c. 30% y/y in 2Q21. On an SA basis, IP continued to stagnate for the second month in a row (-0.1% SA month on month in July vs. -0.2% SA m/m in June and +0.9% SA m/m in May). Manufacturing contracted 0.5% SA m/m, exhibiting zero or negative growth rates for the fourth month in a row. We saw increased production in food, beverages and tobacco, and machinery and equipment, while textiles, clothes and intermediary goods all showed signs of moderation.
05.08.2021 11:26 Russia`s GDP catches up with pre-COVID level
Russia`s GDP increased by 4.6% year on year in 1H21, according to the estimates of the Ministry of Economic Development. In June 2021 alone, GDP was up by 8.5% y/y, in 2Q21 by 10.1% y/y. Notably, in 2Q21 GDP grew by 1.5% compared to the same quarter of pre-crisis 2019, thus marking full recovery mostly driven by domestic demand, the ministry commented. As the economy continued a strong bounceback, this month the ministry upgraded its growth forecast for 2021 to 3.8% from 2.8%, and does not expect economic growth to go below 3% annually post the coronavirus (COVID-19) crisis. Russia`s economy had a mild recession in 2020 (3% contraction) and has bounced back in the first two quarters of this year much more strongly than expected.
09.07.2021 11:53 Russian inflation hits 6.5% in June, and can go higher
Russian CPI jumped to 6.5% y/y in June and kept accelerating in the first week of July. While supply-side inflation seems to have stabilised, demand-driven CPI stands out in pharma, construction materials, and tourism sectors. Near-term inflationary risks remain high, keeping the Bank of Russia - and the markets - on their toes. Russian CPI totalled 0.7% month-on-month and 6.5% year-on-year in June. This result represents a material acceleration from the May figure of 6.0% y/y, and it is in line with expectations of economists. In addition, the weekly data points at 0.33% price growth in the first 5 days of July vs. 0.3% in the first 6 days of July 2020, suggesting an inflation rate of 6.5-6.6% y/y as of 5 July.