The Lastest Macroeconomic News

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.

25.04.2021 17:07 Euro and US dollar volatility amid ECB policy discussions

The world`s leading currencies have shown heightened volatility between losses and gains this week as the forex market struggled to digest the ECB`s statements on future interest rates and evidence of a stronger-than-expected US economic recovery. The euro gained 0.1% on Thursday, even posting stronger gains at its peak, and then declining as Europe continued its monetary policy and left uncertainty about stimulus when the economy starts to grow steadily. Growth peaked at a time when Christine Lagarde, head of the ECB, announced "signs of improvement" in the economic uncertainty.

09.04.2021 11:43 Trading foreign stocks just got easier

In many countries of the world, foreign stock trading has been a very popular investment tool for many years. Such assets are bought not only by large international investors, but also by individuals. Shares of many large companies are currently traded on stock exchanges, and, for example, British or American investors have the opportunity to freely buy shares of Russian companies or companies from other countries.

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