Browsing documents with the theme of Politics
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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.
Crunch time for sanctions and the ruble
Damaging escalation. Since early August there have been a number of potentially damaging US sanctions put in place against Russia and the threat level of much more damaging actions is very high.
Russia Macro Monthly September 2018
(Hope in) Tomorrow never dies
Russia Macro Update: Catching a falling knife
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.
The Regions of Russia: A mixed bag for investors
This is the first of three reports, which will provide an in-depth look the more successful regions of Russia, looking at economic, commercial and political factors. The purpose of these reports is to identify which are the more attractive locations for investors and businesses needing to set up operations to satisfy localization requirements.
Russia has 85 administrative regions, about 20-25 of which are significantly ahead of the rest in economic development. This report looks at ten such regions. The second report will cover another nine and the third report will cover four regions.
Uzbekistan Update: The newest investment frontier
Waiting for a debut Eurobond. Uzbekistan will issue a debut Eurobond very quickly, once it receives an international credit rating. The process of getting a rating is ongoing and ministers hope it will be completed by the autumn and a debt issue done by the year-end.Possibly US$1 bln issue. The size range indication is US$300 mln to US$1 bln. Neighboring Tajikistan successfully raised US$500 mln last year but US$1 bln would suit Uzbekistan much better. It is on a fast-track reform path and would probably like to make a strong statement on international markets to reflect this.
Russia Macro Monthly: Pension Reform and its Discontents
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.
Kazakhstan Update – The Twin Peaks Challenge
Strong growth based on oil. Kazakhstan’s economy grew by 4% YoY last year (from 1% in 2016) and looks set to replicate that strong growth again this year. The key driver of last year’s recovery and this year’s expected growth is the combination of rising oil output and the oil price recovery.
Macro Monthly – What Difference Do April Sanctions Make?
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.
Russia’s bank sector consolidation continues … creating opportunities
The Central Bank of Russia continues to cull bad banks. The recent nationalization of 3 large private banks seems to mark the beginning of the end of this process. The sector will remain tightly regulated and the remaining private banks should not be allowed to get themselves into the same bad situation. Investors should do careful due diligence on partner banks in the region, and any decision by local staff not to use a state bank or foreign-owned bank should be carefully reviewed.