Browsing documents with the theme of Oil Prices
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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 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.
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.
Kazakhstan refines its oil strategy
Reliance on hydrocarbons is increasing. While the government talks about diversification the reality is much greater emphasis and visible progress in expanding oil and gas activities. Kashagan output rising steadily. The country produced an average of 1.73 mln barrels of oil per day last year, up by 10.5% from 2016. Most of that extra oil came from the Kashagan field, which finally started producing in late 2016 and will soon plateau at 370,000 barrels per day. Total Kazakhstan production is set to reach at least 2.15 mbpd by 2023. Kazakhstan is out of the OPEC deal.
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 politics, disruptions and the dollar continue to drive oil? – February 2018
OPEC-Russia deal created a favorable backdrop The price of Brent fell 16% in the first half of 2017 but rallied 40% through the second half. The continuation of the OPEC-Russia deal plus steadily rising demand, created a favorable backdrop but it was the combination of several other factors which created the price catalyst.
Macro-Advisory 2018 Political Outlook
Outlook for 2018. There is no reasonable basis to assume there will be any major changes in Russian politics in 2018. We think there is at best a 25% chance that Putin will use his new mandate to implement the major reforms that Russia needs to move to a better economic growth path. More likely he will choose stability because it is lower risk. Speculation will then move to what happens in 2024. Who will Putin choose to succeed him, will that choice be challenged, and what role will Putin have thereafter?
Macro-Advisory Macro Monthly: November 2017-The calm before the…what?
Economic advance continues. The economic recovery continues to strengthen and expand, albeit modestly. September GDP rose 2.4% YoY, bringing the growth for 9M17 to 1.8% YoY. The agriculture sector is a big driver, recording 8.5% growth in September (+4.7% YoY in 9M). There is also a stronger-than-expected recovery in retail sales.
Modest upgrades. Several agencies, such as the World Bank, IMF and Fitch, have modestly upgraded their forecasts for 2017-19. The Economy Ministry is the most bullish but still quite modest, with expected growth rising to 2.3% YoY in 2020.
Macro-Advisory Macro Monthly March 2017
Good economic news … VEB estimates that the economy grew by 0.8% YoY in January, confirming the expectation that the eight-quarter recession will end this quarter. But it also points to a number of one-off events which were mostly responsible for the strong start.
The Economy Ministry and the Gaidar Institute both issued bullish growth outlooks. However, both assume a rise in investment spending over the medium term and effective policy and regulatory changes. That seems overly optimistic for now.
Macro-Advisory 2017 Economy Outlook: Preparing for the Next Phase
This is the third of a three-part review of the factors that are expected to drive investor and business confidence and determine the macroeconomic trends in Russia over the next three years. The first note focused on the oil price outlook and the second on expectations for domestic and geopolitics.
Kazakhstan: 3-D Printing a New Economy
Radical changes. After spending several years of trying to mitigate the impact of the currency collapse and economic slowdown, the government has adopted a radical program to try and revive the economy and attract a bigger volume of inward investment. This includes: Higher budget spending and a 3% deficit; Build up debt and take more money from the National Fund; Take the bad assets from banks into a Bad Bank; Tackling high-level corruption; Changes in government; Constitutional changes aimed at calming concerns over succession.
3rd phase of modernization. The Nurly Zhol modernization program has been re-invigorated with the aim of creating much greater diversification in the economy and boosting the role of SMEs.
3-D printing and food processing. Key target industries include agriculture, food processing, transport & logistics, financial services and technology. The government has particularly highlighted 3-D printing as an industry in which it wants to see Kazakhstan take a lead.