The Lastest Macroeconomic News
21.03.2015 14:02 Why The Russian Ruble Is Stabilizing
The Russian ruble stabilized in recent weeks as the pace of inflation slowed, alongside steadying government benchmark rates. Since July, the U.S. dollar appreciated against the ruble by nearly 80%, but the pair has traded sideways the last few months, seen below. Steadying benchmark rates have led to inflows in the ruble. In March, the benchmark lending rate was set at 14%, down 100 basis-points from 15%, and in line with estimates for 14%. Over the last year, the benchmark rate has been increased to as high as 17%, from lows below 6%, and now to current levels. Even though the outlook for the Russian economy is not optimistic, it is relatively more optimistic than at points during the end of 2014. The Central Bank of Russia has conceded that inflation will remain high, and its economy will grow slower, but further large devaluations in its currency look to be over, for now. Russia`s economy is not strong, but is improving, and looks ready to embrace the weakness that lies ahead due to sanctions from the West, the low price of oil, and a war with Ukraine. Investors too have priced in expectations for the future of Russia, leading to a stabilizing currency. Expect the ruble to trade sideways in coming months against most currencies, even advancing against currencies that are easing policy, such as the euro.
20.03.2015 20:48 Green Earth: For The First Time In 40 Years, World Economy Continued To Grow, But Carbon Emissions Didn`t Climb
This year has been a historic year for our planet. While the world economy has continued to grow, the CO2 emissions haven`t climbed. We haven`t been able to pull off this feat for the last 40-odd years. A recently compiled report has indicated that, while the global economy continued its unabated march owing to relatively peaceful times, our collective carbon emissions or as it is commonly referred to as carbon footprint hasn`t become larger. The group behind the report – the International Energy Agency (IEA) – feels it is due to the considerable growth in deployment of renewable energy facilities by some of the biggest countries and their governments. As the dominant species of the earth, we still put out 32.3 billion tons of carbon into the atmosphere last year. While this may be a deeply concern-worthy figure, we can take solace in the fact that this was the almost the same amount we spewed into our environment in 2013. Meanwhile, the global economy grew about 3 percent.
19.03.2015 10:43 Russian Economy Shrank 0.7% in First Quarter, Central Bank Says
Russia`s economy shrank 0.7% on the year in the first quarter, Russian news agencies reported Monday, citing the central bank`s first deputy chairwoman, Ksenia Yudaeva. However, the Bank of Russia said on its website that its models paint a more optimistic economic outlook than the majority of official forecasts. According to its latest economic outlook, growth could reach 0.6% on the year in the second quarter. The central bank`s second-quarter forecast contrasts with its own forecast for the whole of 2015, for a gross domestic product contraction of up to 4%. Market economists and credit-rating firms expect the economy to contract by more than 5% this year, due to a sharp drop in oil prices and Western sanctions against Moscow. The central bank noted that its outlook for the second quarter could be revised lower as more official economic data is published. Russia`s Central Bank expects the country`s GDP recovery growth at 5.5-6.3% in 2017, the regulator said in its monetary policy report. In its previous forecast, the Russian Central Bank expected the domestic economy to expand by 0.8% in 2017.
18.03.2015 14:12 Russia cuts interest rate to 14% amid fears over economy
The Russian central bank has cut interest rates by one percentage point, sending a strong signal that it sees the rapidly declining economy as a more serious worry than high inflation. The bank cut its main interest rate to 14%, continuing an easing cycle that began in January when it unexpectedly cut the rate by two points. This time economists had broadly expected Friday`s move as the downturn gains pace due to the low international price of oil, Russia`s main export, and western sanctions imposed over Moscow`s role in the Ukraine conflict. The rouble has stabilized since a panicky collapse late last year, giving the bank breathing room to continue easing. However, the bank signaled that it is preparing for a worsening economy if the oil price fails to maintain a recent recovery. A central bank monetary policy document published on Friday said the economy could contract by up to 5.8% this year in a “risk scenario” based on oil prices averaging $40-$45 per barrel.
16.03.2015 14:49 Russian economy is ready to grow
After a year of sanctions and a contraction, the Russian economy is ready for the upside. What it needs are economic reforms and international integration — not further sanctions and geopolitical isolation. While the political impact of the opposition leader Boris Nemtsov`s killing has been limited in Russia, it has fueled demands for new sanctions against Moscow in the West. Meanwhile, Russian equity valuations suggest potential for a strong performance over the coming months. Nevertheless, as long as sanctions prevail, the potential destabilization in the Russian economy and severe collateral damage in Europe will steadily increase.
15.03.2015 13:41 Russian economy could shrink by 5.8 percent in 2015
The Russian economy could contract by up to 5.8 percent this year in a "risk scenario" based on oil prices averaging around $40-$45 per barrel, a central bank said. Russia`s economy has slowed sharply in recent months as a collapse in oil prices and Western sanctions over the Ukraine crisis have dragged on growth. The central bank sees gross domestic product contracting by 3.5-4.0 percent in 2015 in its "base case", which assumes oil prices averaging $50-55 per barrel. The bank sees the average price of Urals crude oil URL-E, Russia`s main export blend, rising to $60-65 in 2016 and $70-75 a barrel in 2017, under this base scenario. Under these assumptions, it forecasts a 1.0-1.6 percent economic contraction in 2016 followed by a 5.5-6.3 percent rebound in gross domestic product in 2017. The quarterly monetary policy document, which includes the bank`s latest macroeconomic forecasts, also showed the bank foresees its foreign currency reserves shrinking by $50 billion in 2015 but staying constant in 2016 in its most likely scenario. The bank also expects the reserves to recover by $36 billion in 2017. It saw Russia`s current account surplus at $64 billion this year, rising to $90 billion in 2016 and $119 billion in 2017.
13.03.2015 23:38 Russia`s GDP cheer may not last
Decent macro results in January may have showcased Russia`s economic flexibility, but it might be a false dawn. A respectable economic thinktank predicts a turn for the worse, and some preliminary February numbers already point to a deteriorating budget situation. The Russian economy did pretty well in January. Official statistics from the economy ministry show that GDP was down a modest 1.5% year-on-year (minus 1.1% y/y adjusted for fewer working days). Industrial output was up 0.9% y/y with a number of industries showing double-digit growth, offsetting double-digit declines in some others. There is evidence that the rouble devaluation is helping commodity exporters, while import substitution has had a visibly positive impact on, among others, food producers (benefiting from sanction-related import bans) and pipe manufacturers (offsetting a sharp drop of imports from Ukraine). At the same time, investments were sharply down ( minus 6.3% y/y) as well as retail trade (minus 4.4% y/y). Real disposable income shrank 0.8% y/y in January after a 6.2% drop in December. The release of January stats coincided with the publication of a 2015 forecast from the Gaidar institute for economic policy, an independent economic thinktank. It argues that the economic contraction in 2015 will be sharper than forecast by the Russian government, because of a deeper cut in investments and a steeper fall in disposable income.
12.03.2015 14:39 Three Ways Sanctions Have Weakened Russia`s Economy
Next week, EU leaders will meet to discuss effective, long-term strategies for policy with Russia. So far, sanctions have not been effective in changing Russian public support of Putin`s government. “We can see with full clarity that they are trying to divide us inside of Europe, as well as Europe and America,” EU Council chief Donald Tusk said at the White House after a meeting with President Obama ahead of next week`s summit. “But when we are united, we will be able to put a stop to the aggressive policy of Russia.” The White House declared last week that sanctions launched against Russia last March prohibiting banks and other financial institutions from doing business with Russia will continue for another year. Western sanctions -- on top of falling oil prices -- have sunk Russia`s economy in an almost steady decline over the past year. According to a new analysis by Bloomberg Business, Russia currently has the 7th most miserable economy in the world -- worse than Colombia, Croatia and Slovakia. Despite this, Russians remain resilient, overcoming food shortages with innovations in product creation, and ultimately overwhelmingly supporting President Vladimir Putin`s policies. Here are three ways Russia`s economy has declined over the past year, but haven`t actually affected popular opinion: FOOD EMBARGO. In response to sanctions from the west, the Kremlin banned imported foodstuffs from any country which had issued sanctions against Russia. As a result, food prices have spiked. INFLATION. The inflation rate in Russia reached a thirteen-year high for the nation in the month of February 2015 was 16.7, up from 15.0 in January, according to the Bank of Russia. DWINDLING RESERVES. Unstable markets have forced Russia liquidate a chunk of its foreign currency and gold reserves. The Central Bank`s reserve of about $600 billion has dwindled by more than $200 billion since 2008.
09.03.2015 23:15 Russian inflation reaches 16.7% in February 2015
Russian inflation reached 16.7 per cent in February as lower oil prices and Western sanctions over Ukraine caused the biggest jump in prices over one year since 2002, the state statistics service said. Prices rose a further 2.2 per cent in February after leaping 3.9 per cent in January - a rate unseen in 16 years - as the economy remains fragile after the rouble, at the end of last year, lost half its value against the dollar. The most dramatic rise was in food prices, soaring 23.3 per cent over the past year and 3.3 per cent in February alone. This increase resulted from Moscow`s ban on European Union and US food imports in retaliation for sanctions slapped on Russia over its backing of rebels in eastern Ukraine. Basic vegetables consumed regularly in Russian households were among the worst-affected with onions, carrots and beetroot increasing by around 10 per cent each in February. The economy ministry is expecting inflation to peak at 17 per cent by April, while the annual rate for 2015 has been forecast at 12.2 per cent. Russia`s inflation was estimated at 11.4 per cent in 2014, the highest level since the financial crisis of 2008, after coming in at 6.5 per cent in 2013.
06.03.2015 16:35 No, Obama, Russia`s economy isn`t in tatters
Western politicians and pundits should be more careful with their predictions for the Russian economy: Reports of its demise may prove to be premature. Bashing the Russian economy has lately become a popular pastime. In his state of the nation address last month, U.S. President Barack Obama said it was “in tatters.” And last week, Anders Aslund of the Peterson Institute for International Economics published an article predicting a 10 percent drop in gross domestic product this year - more or less in line with the apocalyptic predictions that prevailed when the oil price reached its nadir late last year and the ruble was in free fall. Aslund`s forecast focuses on Russia`s shrinking currency reserves, some of which have been earmarked for supporting government spending in difficult times. At $364.6 billion, they are down 26 percent from a year ago and $21.6 billion from the beginning of this year. Aslund expects $166 billion to be spent on infrastructure investments and bailing out companies, and another $100 billion to exit via capital flight and other currency outflows. As a result, given foreign debts of almost $600 billion, “Russia`s reserve situation is approaching a critical limit,” he says. What this argument ignores is that Russia`s foreign debts are declining along with its reserves - that`s what happens when the money is used to pay down state companies` obligations.