The Lastest Macroeconomic 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.
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.