Browsing documents with the theme of Monthly
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Macro Monthly November 2018
Sanctions reprieve, not a pardon. It is now most unlikely that Russia
will face any major new sanctions from the US before year-end.
Congress has more pressing priorities and the absence of any election
interference allegations reduces the urgency. But key senators have
made clear that there will be new legislation introduced in 2019 and
they will press for more oligarchs and Russian enterprises to be
added to the SDN list.
Russia Macro Monthly February 2019
A tough 1H in store. The mood in Russia is poor. Confidence indicators are weak for both consumers and companies and economic indicators are falling. GDP growth in 1H will be close to 1.0%, at best.
Revised forecasts and scenarios. In this report, we revise some macro forecasts for 2019-21 and set out the different scenarios that may result in a worse or better result in the review period.
Russia Macro Monthly December 2018
Optimistic EconMin. The Economy Ministry added more detail to its
optimistic view of the economy in the 2025 to 2036 period. It expects
average GDP growth of 3.0% in the period. But, realistically, this is
unlikely without major reforms. So far, these are stalled.
Economy a little less gloomy. The leading indicator of economic
activity showed growth of 2.5% in October, a strong improvement on
previous months. The PMI manufacturing index also jumped sharply,
so the softness of August and September may be temporary.
Macro Monthly October 2018: Is Russia in the eye of a storm or preparing for a new growth phase?
Waiting for sanctions updates. There is a sense of being in the eye of the storm with regard to sanctions. After the frenzy in August and early September, the situation is now calm. But activity will pick up in November, in the aftermath of the mid-term elections and ahead of the Phase II CBW sanctions decision. We update the current position and highlight some conflicting indicators in this report.
Russia Macro Monthly September 2018
2019 downgrades … Both the Economy Ministry and the Central Bank have cut their GDP forecasts and raised inflation expectations for 2019. But both see the dip as temporary and expect a much better performance from 2020.
… but 2018 growth picture looks marginally better. Both PMI indicators rebounded in August, as did the government’s index of leading indicators for GDP. 2Q18 GDP was reported at 1.9%.
Russia Macro Update: Catching a falling knife – August 2018
Losing momentum. The Q2 GDP growth indicator was weaker than expected and is consistent with other indicators that show slowing momentum. But we still see no reason to adjust our 1.7% growth forecast for this year. Another sanctions surprise. The latest US sanctions took everybody by surprise and have contributed to further ruble weakness. The risk of additional sanctions, especially the dangerous DESKAA bill now looking for support in Congress, is very high. There is no danger of a financial crisis or a drop in expected growth but the real impact is the drop in investment and FDI (less than US$2 bln in Q2 from over US$12 bln in 2Q17). This badly hurts future growth prospects.
Russia Macro Monthly: Pension Reform and its Discontents – July 2018
Russia hosts good World Cup. Despite our headline in the June Monthly, Russia’s football team exceeded all expectations. The hosting of the event also confounded critics. However, optimism that this may lead to reform acceleration or, e.g. a much easier tourist regime, and thus boost tourism, is unfounded at this stage.
Pensions reform backlash. Opinion polls show a large majority of Russians are unhappy with the proposal to raise the retirement age. Putin is likely to wait until the extent of public feeling can better be gauged in the autumn before making a final decision. He has never pushed a genuinely unpopular reform because of the instability risk.
Russia Macro Monthly June 2018: Will the new government team fare better than the nation’s footballers?
New government, new challenges. Prime Minister Medvedev unveiled a government with a few new faces, and a plan to deploy RUB8 trillion (US$129 ln) on national projects on health, education construction, and the digital economy.
Kudrin given oversight role. Alexei Kudrin will head the Audit Chamber. Kudrin has regularly stated that he would never take a non-job in government so it is expected that he will make the Audit Chamber a more vocal agency and have a greater role in budget spending oversight.
Macro-Advisory May 2018 Monthly – Now for The Hard(er) Part
New-old government. As expected, Prime Minister Medvedev is to remain in his job. There are some significant changes amongst deputy PMs, indicating a need for a new approach, which may be interpreted as signaling more spending on health, education and infrastructure.
Need to focus on the economy. Polls show that while people strongly support the president they are increasingly critical of the economic performance. It is clear that if Putin wants to retain public support during this next term, he will need to focus more on the economy.
Macro Monthly – What Difference Do April Sanctions Make? – April 2018
Sanctions game-changer. The 6 April US sanctions were something of a game-changer as they targeted some oligarchs and their businesses. Investors and businesses are likely to adopt a more cautious approach to Russia for some time until the risk level is better understood.
Waiting for a response. A Duma committee is debating retaliation measures, which it wants the President to act on. But comments from Administration officials suggest a much more cautious approach and a wish to avoid any actions which would hurt the economy.
Russia Macro Monthly: Can continuity lead to change? – March 2018
Putin’s election address to Federal Assembly. In lieu of a concrete election program, the President made a late annual state-of-the-nation speech that laid out a liberal economic vision and tough foreign policy. The latter appears to be more electoral posturing than a major change in nuclear doctrine. We set out the main economic points and those with implication for business opportunities, in this monthly.
Kudrin warns of inertia. Alexei Kudrin said that there is still no agreement on an economic reform agenda within the government or with Putin. He warned that without a clear program the government will follow a “inertia program” which will keep growth low.
Will 2018 prove to be a turning point? – February 2018
2017 growth at 1.5%. Rosstat estimates last year’s GDP growth at 1.5%. A weakening industrial production trend was offset by stronger growth in agriculture and a recovery in retail sales. VEB estimates Q4 growth at 0.6%, down from +1.8% in Q3 and 2.5% in Q2.
2018 should be better. We forecast growth in 2018 at 1.8%, rising to 2.0% in 2019. The key factor will be the strength of consumer activity and whether the government will boost budget spending, should the average oil price stay above US$60/bbl, later in the year.