Monday May 22 2017
Russia Jobless Rate Unexpectedly Falls To 5.3% In April
Federal State Statistics Service | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The unemployment rate in Russia declined to 5.3 percent in April of 2017 from 5.9 percent in the same month a year ago and well below market expectations of 5.5 percent. It was the lowest jobless rate since December last year. The number of unemployed people decreased by 470 thousand to 4.050 million while the number of economically active people fell by 400 thousand to 75.9 million, representing 52 percent of total population.

The number of unemployed people decreased by 470 thousand to 4.050 million. Compared to March, the number decreased by 59 thousand.    

The number of economically active people decreased by 400 thousand to 75.9 million, representing 52 percent of total population. Compared to March, the figure remained unchanged.

Real wages increased 2.5 percent year-on-year, following an upwardly revised 3.5 percent rise in March and above market expectations of 1.7 percent. Nominal wages went up 6.7 percent to RUB 37,311 (7.6 percent in March) while real disposable income fell 7.6 percent (-2.3 percent in March).




Thursday May 18 2017
Russian Economy Continues To Recover In Q1
Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Russian GDP advanced 0.5 percent year-on-year in the first quarter of 2017, following 0.3 percent growth in the previous period and above market expectations of 0.4 percent, according to preliminary estimates. The economy returned to growth after a two-year recession that was mainly caused by low oil prices and sanctions imposed on Russian individuals and businesses in response to the annexation of Crimea.

In the first quarter this year, exports surged by 35.2 percent to USD 83.8 billion, marking the first increase since the second quarter of 2014 and the biggest since 2011. Exports were mainly boosted by fuel and energy products; chemicals; machinery and equipment and food. Imports rose 25.5 percent to USD 45.5 billion, driven by machinery and equipment; chemical products and food.

Consumer demand shows signs of recovery, as real disposable income fell less (-0.2 percent from -5.9 percent in Q4) and real wages growth edged up (1.9 percent from 1.8 percent in Q4). Furthermore, the retail sales declined by 1.8 percent (-4.6 percent in Q4), the smallest decrease since the fourth quarter of 2014. ,

Also, transport output surged 5.4 percent (1.8 percent in Q4). 

Meanwhile, the industrial output rose by a meager 0.1 percent (1.7 percent in Q4), as 1.2 percent increase in mining and quarrying was offset by a 0.8 percent fall in manufacturing. The sectors which led the decline were the manufacturing of tobacco products and vehicles, metallurgy and printing. Agricultural output went up by a slower 0.7 percent (5 percent in Q4). Construction fell further by 4.3 percent (-2 percent in Q4).

According to the Central Bank's forecast, the GDP is expected to expand 1 percent -1.5 percent. The IMF and World Bank are predicting 1.4 percent and 1.5 percent growth, respectively. 





Thursday May 18 2017
Russia's Economy Returns To Growth
Yekaterina Guchshina yekaterina@tradingeconomics.com

The Russian GDP advanced 0.5 percent year-on-year in the first quarter of 2017, following 0.3 percent growth in the previous period and above market expectations of 0.4 percent, according to preliminary estimates. The economy is now recovering after two years recession, brought on by falling oil prices, western sanctions and a weak currency. The economy is expected to grow between one and two percent in 2017-2019, while further GDP growth calls for efficient structural government reforms. The main county’s challenges are continued heavy dependence on oil revenues, the weakness of public administration, lag in technological innovation, financial isolation and geopolitical tensions.

Business
After solid growth in the first quarter, Russian private sector lost some momentum in April, with Composite PMI weakening to 6-month low. Manufacturing sector led the decline, as production softened substantially, reflecting slowdown in new orders. Meanwhile, services sector continued to demonstrate marked growth, as both activity and new orders rose for the 15th month running, signalling strong demand. Industrial output increased 0.8 percent year-on-year in March, following 2.7 percent drop in the previous period, mainly driven by metallurgy, machinery and equipment, transport manufacturing and coal mining. Also, the business confidence picked up to the highest level since August of 2013, amid more favorable production outlook, while lack of demand and high taxes seen as the main challenges. 

Trade
In March, trade surplus went up 61.7 percent year-on-year to USD 12.6 billion. Exports surged by 35.2 percent to USD 31.3 billion, mainly boosted by fuel and energy products; metals; chemicals; machinery and equipment and food. Sales rose for the fifth consecutive month after three years of contraction. Imports jumped 21.8 percent to USD 18.7 billion, driven by machinery and equipment; chemical products; textiles and footwear; metals and food.

Inflation
The inflation has slowed down significantly, supported by the ruble appreciation, high food stocks due to the good harvests of 2015-2016, and tight monetary and credit policy, which helped to maintain a household savings behavior. In April, annual inflation stood at 4.1 percent and expect to reach a government target of 4 percent as early as next month. Following a faster decline in inflation, the Central bank lowered its benchmark interest rate already twice this year to 9.25 percent and signaled the possibility of further cuts in the second and third quarters. Inflation is forecasted to remain close to the government target of 4 percent during next years.

Unemployment
The labor market is adjusting to the new economic environment and the jobless rate remains at a consistently low level. The unemployment rate falls to 5.4 percent in March compared to 6 percent a year ago. The real wages returned to the growth while the real disposable income kept shrinking. Meantime, the country faces several problems as reduction of working-age population and ageing, in combination with one of the lowest retirement age in the world. This puts a heavy burden on the pension system. Although a gradual increase of the pension age is supported by most of experts and politicians, this step is highly unpopular among the public and can lead to social protests.

Consumers 
The retail sales declined by 0.4 percent year-on-year in March, the least since December of 2014. Also, new car sales showed the signs of recovery, rising for the second consecutive month by 6.9 percent in April, after falling during the last 4 years. Furthermore, in the first quarter, consumer confidence improved to the highest level since the third quarter of 2014, as households were less pessimistic about the country's economic situation, personal financial situation, and conditions for major purchases. 



Wednesday May 17 2017
Russian Economy Returns To Growth
Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Russian GDP advanced 0.5 percent year-on-year in the first quarter of 2017, following 0.3 percent growth in the previous period and above market expectations of 0.4 percent, according to preliminary estimates. The economy is now recovering after two years recession, brought on by falling oil prices, western sanctions and a weak currency.

Business
In March, the industrial output rose by 0.8 percent, following 2.7 percent drop in the previous period. Manufacturing production went up 0.8 percent, mainly driven by metallurgy, machinery and equipment, chemistry, transport, food and clothing. Mining production rose 0.3 percent, led by coal output. Also, the private sector activity growth weakened to six-month low in April, as expansion of manufacturing production softened substantially, reflecting slowdown in new orders, while service sector continued to demonstrate marked growth. Meantime, business confidence picked up to the highest level since August of 2013, led by more favorable production outlook, while lack of demand and high taxes seen as the main challenges.   

Trade
In March, trade surplus went up 61.7 percent year-on-year to USD 12.6 billion. Exports surged by 35.2 percent to USD 31.3 billion, mainly boosted by fuel and energy products; metals; chemicals; machinery and equipment and food. Sales rose for the fifth consecutive month after three years of contraction. Imports jumped 21.8 percent to USD 18.7 billion, driven by machinery and equipment; chemical products; textiles and footwear; metals and food.

Inflation
The inflation has slowed down significantly, supported by the ruble appreciation, high food stocks due to the good harvests of 2015-2016, and tight monetary and credit policy, which helped to maintain a household savings behavior. In April, annual inflation stood at 4.1 percent and expect to reach a government target of 4 percent as early as next month. Following a quicker decline in inflation, the Central bank lowered its benchmark interest rate already twice this year to 9.25 percent and signaled the possibility of further cuts in the second and third quarters. Meantime, inflation risks remain in place, due to a possible volatility of commodity prices and financial markets, as well as concerns over the prospects of oil exporting countries’ extension of production cuts.

Unemployment
The labor market is adjusting to the new economic environment and the jobless rate remains at a consistently low level. The unemployment rate falls to 5.4 percent in March compared to 6 percent a year ago. The real wages returned to the growth while the real disposable income kept shrinking. Meantime, the country faces several demographic problems as reduction of working-age population and ageing. In combination with one of the lowest retirement age in the world this puts a heavy burden on the pension system. Although a gradual increase of the pension age is supported by most of experts and politicians, this step is highly unpopular among the public and can lead to social protests. 

Consumers
The retail sales declined by 0.4 percent year-on-year in March, the least since December of 2014. Also, new car sales showed the signs of recovery, rising for the second consecutive month by 6.9 percent in April, after falling during the last 4 years. Furthermore, in the first quarter, consumer confidence improved to the highest level since the third quarter of 2014, as households were less pessimistic about the country's economic situation, personal financial situation, and conditions for major purchases. 



Friday May 12 2017
Russia Trade Surplus At Near 2-Year High In March
Yekaterina Guchshina | yekaterina@tradingeconomics.com

Russian trade surplus increased by 61.7 percent to $12.6 billion in March 2017 from $7.8 billion in the same month a year earlier and above market expectations of a $11.9 billion surplus. It was the largest trade surplus since June of 2015, as exports jumped 35.2 percent to $31.3 billion and imports went up 21.8 percent to $18.7 billion.

Exports increased by 35.2 percent to $31.3 billion from $23.1 billion in March 2016. Exports to non-CIS countries advanced 37.2 percent to $ 27.3 billion (from 28.5 percent in February) while those to CIS countries went up 23 percent to $4 billion (from 24.6 percent). 

Imports went up 21.8 percent to $18.7 billion from $15.4 billion a year earlier. Imports from non-CIS countries climbed 20.1 percent to $16.6 billion (from 18.8 percent in February) and those from CIS countries advanced by 36.6 percent to $2.1 billion (from 42.2 percent).

The trade surplus with non-CIS countries jumped by 76.2 percent to $10.7 billion while with CIS countries went up 10.7 percent to $1.9 billion.

According to more detailed data from Russian Customs Statistics, trade surplus went up by 59.2 percent year-on-year to $13.9 billion. Exports surged by 34.6 percent to $31.6 billion and imports rose by 20 percent to $17.7 billion. 

Exports rose mainly for: fuels and energy products (46.8 percent to $19 billion) followed by metals (37.8 percent to $3.8 billion); chemical products (18.8 percent to $2.4 billion); foodstuffs and raw materials (40.8 percent to $2 billion) and machinery and equipment (1.2 percent to $1.7 billion).

Imports went up for: machinery and equipment (21.5 percent to $8.1 billion) followed by chemical products (22.7 percent to $3.5 billion); foodstuffs and raw materials (15.9 percent to $2.4 billion); textiles and footwear (26 percent to $1.1 billion) and metals (30.3 percent to  $1.2 billion).





Friday May 05 2017
Russia Inflation Rate At 5-Year Low Of 4.1%
Federal State Statistics Service | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Consumer prices in Russia increased by 4.1 percent year-on-year in April 2017, easing from a 4.3 percent rise in the previous month and below market expectations of 4.2 percent. It was the lowest inflation rate since May 2012, as prices increased at a slower pace for housing and utilities, clothing and footwear and transport. On a monthly basis, prices went up 0.3 percent after advancing by 0.1 percent in March.

Prices rose at a slower pace for housing and utilities (5.1 percent from 5.2 percent in March); clothing and footwear (5.7 percent from 6.1 percent); transport (4.8 percent from 5.2 percent); furnishings and household equipment (2.8 percent from 3.3 percent); alcoholic beverages and tobacco (7 percent from 7.6 percent) and hotels and restaurants (3.7 percent from 3.9 percent). In contrast, food inflation accelerated (3.4 percent from 3.1 percent).

Annual core inflation rate declined to 4.1 percent from 4.5 percent in March.

On a monthly basis, prices went up 0.3 percent after rising by 0.1 percent in March, as prices rose at a faster pace for food (0.6 percent from 0.1 percent) and services (0.2 percent from 0 percent).




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).