The Lastest Macroeconomic News
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.
05.07.2021 16:32 Buying and selling currency on the Moscow Exchange
Interest in foreign exchange in the history of modern Russia has always been high. This is explained both by the relatively high inflation, which, even if not so noticeably in recent years, is nevertheless systematically devaluing the ruble, and by the instability of the national currency exchange rate, which can depreciate twice or more in a short time, as eloquently evidenced by history. In recent months alone, the range of fluctuations in the exchange rate of the ruble against the US dollar and the euro was more than 10%. The ruble is very much tied to geopolitical factors. The weakness of the national currency is explained by sanctions, the underdevelopment of economic and financial institutions, and the excessive dependence of the Russian economy on the export of natural resources, primarily oil and natural gas. As the economic situation worsens, the demand for foreign currency increases, during the period of improvement, investors again switch to rubles. However, the interest in trading does not disappear anywhere, and their volumes are only growing. Thus, in June of this year, the volume of foreign exchange trading on the Moscow Exchange increased by 5.9% compared to the same month last year and amounted to 11.4 trillion. rubles. Of this amount, the volume of trading in spot instruments amounted to 7.6 trillion. rubles, and another 18.9 trillion. accounted for swap and forward transactions.
05.07.2021 13:46 Russia`s services PMI stutters as recovery runs into inflation headwind
Russia`s seasonally adjusted IHS Markit Russia Services Business Activity Index registered 56.5 in June, down from 57.5 in May, but still well above the 50 no-change mark, as services continue to recover from last year`s annus horribilis. The services result brings some relief after the soaring producer prices caused the manufacturing PMI to shrink for the first time this year in June. The headline seasonally adjusted manufacturing PMI posted a contraction of 49.2 in June, down from 51.9 in May and below the no-change 50 market, which signals a contraction. Combined the expansion in services helped keep the IHS Markit Russia Composite PMI Output Index comfortably in the black, posting 55.0 in June, but manufacturing dragged the overall result down from 56.2 in May. The overall upturn was broad-based, but led by a sharp expansion in the service sector.
14.05.2021 13:48 Russian CPI slows in April, but no further relief seen till year-end
Russian CPI slowed by 0.3 ppt to 5.5% YoY in April and is likely to remain around that level until November-December, when the high base effect will become strong enough to overcome the persistent upward price pressures that are still present in the key consumer segments. Bank of Russia is likely to keep tightening at the coming meetings. The April CPI result of 5.5% year-on-year is in line with our forecast (consensus was split between 5.5% and 5.6%) and points at a deceleration from the March peak of 5.8% YoY. Higher base effect (in April 2020 the YoY CPI rate jumped 0.6 percentage points vs. March reacting to the pandemic/lockdown shock) is the sole factor of this slowdown.
06.05.2021 11:19 Gold as a tool for diversifying investments
Currently, many investors, having received profits from trading in the stock market, prefer to shift part of their money into gold, thereby protecting their own investments from inflation and other risks. This trend is noted by Andrei Zagorodny, Deputy Head of the Treasury at Tsentrokredit Bank. According to the expert, instability is present on the Russian stock market. The largest growth took place in the second half of 2020, when investors were actively investing in the shares of exporting companies, primarily steel producers. In the first quarter of 2021, investors took profits. Now the market is consolidating, many have withdrawn their capital and do not know what instruments to invest in in the future.
01.05.2021 13:45 Purchase of OFZs as an alternative to bank deposits
In 2020-21, due to a significant decrease in rates on bank deposits, which currently do not even catch up with inflation, private Russian investors began to pay more attention to the federal loan bond (OFZ) market. As a result, while some foreign investors left this market because of the sanctions, domestic ones, on the contrary, began to actively enter it. OFZ are securities issued by the Ministry of Finance of the Russian Federation in order to attract investors& funds. These securities are placed on the stock market and traded on the Moscow Exchange.
28.04.2021 17:47 Eurobonds are now available to everyone
In recent years, the placement of Eurobonds and investments in them has become more and more popular. So, in particular, according to the report of the Accounts Chamber of the Russian Federation, for 2020, despite the sanctions, the Ministry of Finance placed Eurobonds in the amount of $ 2 billion. At the same time, the placement was made at low interest rates, and the yield of securities was: with maturity in 2027 year - 1.125% per annum, in 2032 - 1.85%. The rates were comparable to those of other developing countries. About 40% of the total issue was purchased by domestic investors, which indicates the demand for such securities in the local market. The remaining 60% was acquired by foreign investors. The placement was completed in November 2020 and was deemed successful. Due to US sanctions, it focused on the domestic and European markets, and the demand for securities exceeded supply by 0.7 billion euros.
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