Friday April 28 2017
Russia Cuts Key Rate To 9.25%
Central Bank of the Russian Federation | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Central Bank of Russia has lowered its benchmark one-week repo rate by 50 bps to 9.25 percent on April 28th, while markets expected 25 bps rate cut. Policymakers signaled the possibility of further cuts in the second and third quarters this year, as inflation continued to decline and is projected to reach 4 percent target before the end of 2017.

Information Notice of Bank of Russia:

Annual inflation has moved close to the target level. Annual consumer price growth is down to 4.3% from 4.6% in February. Inflation slowdown was broadly facilitated by the ruble appreciation amid relatively higher oil prices, persistent interest in investment in Russian assets among external investors, and a drop in the sovereign risk premium. These months saw food inflation unusually low for this period, supported by the high level of supply including bumper harvests of 2015-2016.

Domestic demand continues to exert a disinflationary effect. Households broadly tend to demonstrate savings behaviour patterns. There are signs of nascent recovery in consumer activity. Consumer expenditures are expected to restore gradually as real disposable incomes continue to show weak growth. 

In order to maintain the propensity to save and anchor sustainable inflation slowdown driven by demand-side restrictions, monetary conditions should remain moderately tight. Positive real interest rates are held at the level which ensures demand for loans without increasing inflationary pressure and upholds incentives for saving. A gradual decline in nominal interest rates and the easing of non-price bank lending conditions will remain. Given banks’ conservative policy stance, these trends will mostly influence high-quality borrowers.

The Bank estimates that the economy continued to recover in the first quarter and expects fixed capital investments to increase. Industrial production is maintaining positive dynamics and unemployment is showing a downward trend. The labour market is adjusting to the new economic environment, with signs beginning to emerge that labour shortages are finding their way in individual segments. According to the estimates, the observed annual rise in real wages will foster gradual growth in consumer activity without posing additional proinflationary pressure amid increased supply of goods and services.

Given the current recovery dynamics and the economy’s growing resilience to the fluctuations in the external economic climate, the Bank of Russia expects that the GDP will grow in 2017-2019 even if the conservative oil price scenario materialises.

Possible volatility of global commodity and financial markets caused, among other things, by negotiations between oil exporting countries to extend agreements on limiting oil production may become the key source of inflation risks in the near future. It may result in a temporary hike in volatility of capital flows and the exchange rate undermining exchange rate and inflation expectations. That said, inflation risks will be lower in the scenario with rising oil prices. Legislative consolidation of a budget rule will also mitigate medium-term inflation risks.

In making its decision on the key rate, the Bank of Russia will assess the probability of the baseline scenario implementation (where oil prices drop to $40 per barrel) and the scenario with rising oil prices, alongside with assessing inflation and the economy dynamics relative to the forecast. The Bank’s assessment of the overall potential of the key rate reduction before the end of 2017 is unchanged. Given the decision taken and moderately tight monetary policy sustained, the Bank of Russia forecasts that the annual consumer price growth will reduce to 4% before the end of 2017 and will remain within this target level in 2018-2019.




Tuesday April 18 2017
Russia Jobless Rate Falls To 5.4% In March
Federal State Statistics Service | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Russia declined to 5.4 percent in March of 2017 from 5.6 percent in the previous month and below market expectations of 5.6 percent. A year ago, the jobless rate was 6 percent.

The number of unemployed people decreased by 117 thousand to 4.109 million. Compared to March of 2016, the number decreased by 458 thousand.    

The number of economically active people decreased by 200 thousand to 75.9 million, representing 52 percent of total population. Compared to March of 2016, the figure declined by 200 thousand. 

Real wages increased 1.5 percent year-on-year, following 1 percent rise in February and below market expectations of 2 percent. Nominal wages went up 5.8 percent to RUB 37,640 (5.6 percent in February) and real disposable income fell 2.5 percent, following a 3.8 percent slump in February.




Tuesday April 11 2017
Russia Trade Surplus Widens 40% YoY In February
Yekaterina Guchshina | yekaterina@tradingeconomics.com

Russia Trade Surplus Widens 40% YoY In February Russian trade surplus increased by 40.3 percent to $10.17 billion in February 2017 from $7.2 billion in the same month a year earlier, while slightly below market expectations of a $10.5 billion surplus.

Exports increased by 28 percent to $25.7 billion from $20.1 billion in February 2016. Exports to non-CIS countries advanced 28.5 percent (from 49.1 percent in January) while those to CIS countries went up 24.6 percent (from 34.7 percent). 

Imports went up 21.1 percent to $15.6 billion from $12.9 billion a year earlier, marking the seventh consecutive month of gains. Imports from non-CIS countries climbed 18.8 percent (from 35.8 percent in January) and those from CIS countries advanced by 42.2 percent (from 65.9 percent).

The trade surplus with non-CIS countries jumped by 48.2 percent to 8.6 billion from $5.8 billion a year ago while with CIS countries went up 9.4 percent to $1.6 billion from $1.4 billion.




Wednesday April 05 2017
Russia Inflation Rate Slows To 4.3% In March
Federal State Statistics Service | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Consumer prices in Russia increased by 4.3 percent year-on-year in March 2017, easing from a 4.6 percent rise in the previous month and in line with market expectations. It was the lowest inflation rate since June 2012. On a monthly basis, prices edged up 0.1 percent after advancing by 0.2 percent in February.

Prices rose at a slower pace for food (3.1 percent from 3.3 percent in February); clothing and footwear (6.1 percent from 6.6 percent); transport (5.2 percent from 6.1 percent); furnishings and household equipment (3.3 percent from 3.9 percent); and alcoholic beverages and tobacco (7.6 percent from 8 percent). 

Annual core inflation rate declined to 4.5 percent from 5 percent in February.

On a monthly basis, prices went up 0.1 percent after rising by 0.2 percent in February, as prices rose at a slower pace for food (0.1 percent from 0.2 percent) and remained unchanged for services (0.3 percent in February).




Friday March 31 2017
Russia GDP Expands 1st Time In 2 Years In Q4
Federal State Statistics Service | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Russian economy advanced 0.3 percent in the fourth quarter of 2016, following 0.4 percent contraction in the previous period. It was the first expansion since the fourth quarter of 2014. Net external demand contributed positively, as exports rose by 3.7 percent (4.2 percent in Q3) and imports edged up 0.3 percent (-3.5 percent in Q3). Also, household spending (-3.2 percent from -4.8 percent in Q3) and investments (-0.3 percent from -0.8 percent) contracted at a slower pace. Meanwhile, government consumption fell 0.5 percent, at the same pace as in the previous period. In 2016, the GDP shrank 0.2 percent.

On the production side,

the growth was recorded for: real estate and renting services advanced (1.2 percent  from 0.7 percent in Q3); transport and communication (1.2 percent from 0.3 percent); financial activity (1.7 percent from -1.9 percent); agriculture production (3.2 percent from 5 percent) and production and distribution of electricity, gas and water (5.5 percent from 2.9 percent).

Output fell less for wholesale and retail trade (-0.6 percent from -4.8 percent in Q3); construction (-1.9 percent -3.5 percent) and health (-1.7 percent from -2 percent).

In contrast, manufacturing contracted 0.6 percent (1.3 percent in Q3) and mining and quarrying edged down 0.1 percent (0.1 percent in Q3).





Friday March 24 2017
Russia Cuts Key Rate To 9.75%
Central Bank of the Russian Federation | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Central Bank of Russia has lowered its benchmark one-week repo rate by 25 bps to 9.75 percent on March 24th, while markets expected no change in rates. Policymakers signaled the possibility of further cuts in the second and third quarter of 2017, as inflation slowdown overshoots the forecast, inflation expectations continue to decline and economic activity recovers.

Information Notice of Bank of Russia:

Inflation declines ahead of the forecast. Over the first twenty days in March, annual consumer price growth dropped to an estimated 4.3%, from 5% in January 2017. February saw a continued slowdown in price growth across all key groups of goods and services, and a reduction in seasonally adjusted monthly inflation. Inflation slowdown was broadly facilitated by the ruble appreciation amid higher than expected oil prices, persistent interest in investment in Russian assets among external investors, and a drop in the sovereign risk premium. Bumper harvests of 2015-2016 resulted in high stocks of agricultural products, leading to a material slowdown in food inflation and falling vegetable and fruit prices.

Disinflationary drag from domestic demand persists. Households broadly tend to demonstrate savings behaviour patterns. There are signs of revival in consumption and wages are growing both in nominal and real terms. Noticeable inflation deceleration will be conducive to a further reduction in inflation expectations among households and businesses. The Bank forecasts that the annual consumer price growth will reduce to 4% by the end of 2017 and will remain within this target range in 2018-2019.

In order to maintain the propensity to save and anchor sustainable inflation slowdown driven by demand-side restrictions, monetary conditions should remain moderately tight.  A gradual decline in nominal interest rates and the easing of non-price bank lending conditions will remain. Given banks’ conservative policy stance, these trends will mostly influence high-quality borrowers. The Finance Ministry’s purchases of foreign currency in the FX market did not have any substantial impact on the ruble exchange rate dynamics as the driving factors of its appreciation remained dominant. Short-term inflation risks related to these operations did not materialise.

The pace of economic recovery is higher than expected. Estimates show that quarterly GDP has been going up since 2016 Q2 and the trend is set to continue. Fixed capital investment is expected to advance in Q1. Unemployment remains persistently low. Polling data reflects an improvement in business and household sentiment, conducive to favourable economic dynamics. According to the estimates, the observed annual rise in real wages fosters gradual growth in consumer activity without posing an additional proinflationary pressure amid increased supply of goods and services.

The Bank takes into consideration the oil market uncertainty and keeps pursuing a conservative approach to the forecast, which assumes an oil price reduction to $40 per barrel by the end of 2017 and its further staying near this level. GDP is expected to grow by 1-1.5% in 2017 and by 1-2% in 2018-2019 considering the current dynamics of recovery processes and higher economy resilience to fluctuations in external economic environment. It takes structural changes and time for positive trends to evolve and take root.

The risks that inflation will miss the 4% target by the end of 2017 have slightly abated. Nevertheless, there are still risks that inflation may fail to anchor at the target level in the medium run. These risks are implied by the inertia of inflation expectations, as well as a possible rapid decline in households’ propensity to save. Volatility in the global commodity and financial markets may weigh negatively on expectations with regard to exchange rate and inflation. The said risks may also materialise over the mid-term horizon. Moderately tight monetary policy will allow to limit their effects and maintain consumer price growth rates close to 4%.


Tuesday March 21 2017
Russia Jobless Rate Steady At 5.6% In February
Federal State Statistics Service | Yekaterina Gcuhshina | yekaterina@tradingeconomics.com

The unemployment rate in Russia remained unchanged at 5.6 percent in February of 2017 from the previous month and in line with market expectations. The jobless rate stayed at the highest since May 2016.

The number of unemployed people decreased by 62 thousand to 4.226 million. Compared to February of 2016, the number decreased by 3 thousand.    

The number of economically active people increased by 200 thousand to 76.1 million, representing 52 percent of total population. Compared to February of 2016, the figure remained unchanged. 

Real wages increased 1.3 percent year-on-year, following 3.1 percent rise in January and below market expectations of 2.8 percent. It was the lowest increase since October 2016. Nominal wages went up 6 percent to RUB 35,900 (8.3 percent in January) and real disposable income fell 4.1 percent, following a 8.1 percent jump in January.


Tuesday March 14 2017
Russia Trade Surplus Widens In January
Yekaterina Guchshina | yekaterina@tradingeconomics.com

Russian trade surplus increased by 59 percent to $11.45 billion in January 2017 from $7.2 billion in the same month a year earlier, while below market expectations of a $13.2 billion surplus. Exports jumped 47.2 percent to $25.1 billion and imports went up 38.9 percent to $13.7 billion.

Exports increased by 47.2 percent to $25.1 billion from $17 billion in January 2016. It was the biggest monthly increase since April 2010, as exports to non-CIS countries advanced 49.1 percent (from 10.4 percent in December) while those to CIS countries went up 34.7 percent (from -3.8 percent). 

Imports went up 38.9 percent to $13.7 billion from $9.8 billion a year earlier, marking the sixth consecutive month of gains. Imports from non-CIS countries climbed 35.8 percent (from 10.5 percent in December) and those from CIS countries advanced by 65.9 percent (from 11.5 percent).

The trade surplus with non-CIS countries jumped by 68.9 percent to 10 billion from $6 billion a year ago while with CIS countries went up 9.7 percent to $1.8 billion from $1.3 billion.


Tuesday March 07 2017
Russia Inflation Rate Slows To New 4-1/2-Year Low
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in Russia increased by 4.6 percent year-on-year in February 2017, easing from a 5 percent rise in the previous month and below market expectations of a 4.7 percent gain. It was the lowest inflation rate since June 2012. On a monthly basis, prices went up 0.2 percent after advancing by 0.6 percent in January.

Prices rose at a slower pace for food (3.3 percent from 3.9 percent in January); clothing and footwear (6.6 percent from 7 percent); recreation and culture (1.1 percent from 2.2 percent); furnishings and household equipment (3.9 percent from 4.7 percent); and alcoholic beverages and tobacco (8 percent from 8.5 percent). Meanwhile, inflation was steady for transport (at 6.1 percent).

Annual core inflation rate declined to 5 percent from 5.5 percent in January.

On a monthly basis, prices went up 0.2 percent after rising by 0.6 percent in January, as prices rose at a slower pace for food (0.2 percent from 0.9 percent), non-food items (0.2 percent from 0.5 percent) and services (0.3 percent from 0.5 percent). 


Wednesday February 22 2017
Russia Jobless Rate At 8-Month High Of 5.6% In January
Federal State Statistics Service | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Russia increased to 5.6 percent in January of 2017 from 5.3 percent in December and well above market expectations of 5.6 percent. It was the highest jobless rate since May 2016.

The number of unemployed people increased by 185 thousand to 4.288 million. Compared to January of 2016, the number decreased by 140 thousand.    

The number of economically active people decreased by 100 thousand to 75.9 million, representing 52 percent of total population. Compared to January of 2016, the figure increased by 100 thousand. 

Real wages increased 3.1 percent year-on-year, following an upwardly revised 2.8 percent rise in December and beating market expectations of 2.1 percent. It was the biggest increase since April 2014. Nominal wages went up 8.3 percent to RUB 35,650 (at the same pace as in December) and real disposable income jumped 8.1 percent, following a 6.4 percent drop in December.