Friday August 10 2018
Russian Economy Grows 1.8% in Q2
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's gross domestic product grew by 1.8 percent year-on-year in the second quarter of 2018, following a 1.3 percent expansion reported in the previous period, a preliminary estimate showed.

It was the seventh straight quarter of growth after two years of contraction.

The Bank of Russia said recently that holding the World Cup in Russia made a positive contribution to GDP growth, noting that demand from foreign fans increased the volume of services in the hotel, transport and restaurant sectors. Also, the bank forecast that GDP growth will be 1.5-2.0 percent in both the third and the fourth quarters.

Considering the first half of 2018, the Russian economy grew 1.7 percent, according to early estimates from the Ministry of Economic Development.





Friday August 10 2018
Russia June Trade Surplus Smaller than Expected
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's trade surplus widened by 77.6 percent to USD 15.56 billion in June 2018 from USD 8.76 billion in the same month a year earlier, but still below market expectations of a USD 15.85 billion surplus.

Exports jumped 23.8 percent to USD 36.57 billion in June from USD 29.54 billion a year ago, as exports to non-CIS countries climbed 27 percent to USD 31.87 billion and those to CIS countries went up 5.7 percent to USD 4.70 billion. 

Imports went up at a softer 1.1 percent to USD 21.02 billion from USD 20.78 billion a year earlier. Imports from non-CIS countries increased 0.7 percent to USD 18.68 billion and those from CIS countries advanced 4.7 percent to USD 2.33 billion. 

The trade surplus with non-CIS countries grew 101.6 percent to USD 13.19 billion from USD 6.54 billion a year ago; and with CIS countries it widened 6.7 percent to USD 2.36 billion from USD 2.22 billion.

Considering January-June, the trade surplus widened to USD 90.64 billion from USD 59.68 billion in the same period of 2017.




Monday August 06 2018
Russia Inflation Rate Hits 7-Month High
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's annual inflation rate rose to 2.5 percent in July 2018 from 2.3 percent in the previous month, slightly below market expectations of 2.6 percent. It was the highest rate since last December mainly due to a rebound in food prices.

Within the goods component, food cost surged 0.5 percent in July, recovering from a 0.2 percent drop in June; and prices of non-food products rose by 3.8 percent, faster than a 3.7 percent gain in the previous month. Meanwhile, services inflation eased to 3.8 percent in July from 4.1 percent in June.

Annual core inflation rate picked up to 2.4 percent in July from 2.3 percent in the previous period. It was the highest rate since October last year.

On a monthly basis, consumer prices increased by 0.3 percent in July, following a 0.5 percent advance in June and missing market expectations of 0.5 percent. Non-food prices increased at a softer pace (0.1 percent vs 0.4 percent) and food cost dopped (-0.3 percent vs 0.4 percent), while services inflation picked up (1.3 percent vs 0.7 percent).




Friday July 27 2018
Russia Holds Key Interest Rate at 7.25%
Central Bank of the Russian Federation | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Russia held its benchmark one-week repo rate at 7.25 percent on July 27th despite low inflation, saying uncertainty persists over how strongly the planned increase of the value added tax may affect inflation expectations and how the external conditions will develop. Policymakers expect annual inflation to be 3.5-4 percent in late 2018 and to temporarily overshoot 4 percent in 2019, before returning to 4 percent in early 2020.

Excerpts from the Information Notice of Bank of Russia:

Annual inflation remains low. It stood at 2.3% in June and is expected to hold within the 2.5–2.6% range in July in line with the Bank of Russia’s forecast. According to Bank of Russia estimates, a majority of annual inflation indicators reflecting the most sustainable price movements suggests that inflation is gradually returning to the target.

Inflation for main consumer basket product groups continued to show mixed dynamics in June. The annual price growth rate in the food market was near zero. Fruit and vegetable prices went down on the back of the last year’s high base effect, among other reasons. That said, annual inflation in other food product categories rose from 0.8% in May to 1.1% in June. The annual price growth rate in the non-food market jumped to 3.7% (vs 3.4% seen in May), driven mainly by rising petrochemical prices. Petrol price movements affected inflation expectations which continued to rise in June. Real-time July data show that petrol prices ceased to increase as a result of the decision to cut petrochemical excise taxes. In these circumstances, household inflation expectations stabilised in July. The annual services price growth rate held close to 4% in June.

Given the effect of the planned fiscal measures on inflation and inflation expectations, monetary conditions should remain to some extent tight to limit the scale of secondary effects and stabilise annual inflation close to 4% over the forecast horizon.

The updated Rosstat statistics reflect steadier economic growth in 2017 — early 2018 than previous estimates. It does not materially change the Bank of Russia’s view regarding the influence of business activity on inflation, considering that the reviewed data mostly concern investment goods production. The FIFA World Cup made a positive contribution to the annual GDP growth rate in Q2 (0.1–0.2 pps).

The Bank of Russia forecasts that in 2018 the Russian economy will post a 1.5–2% growth rate, which corresponds to its potential amid the remaining structural limitations.

The balance of risks is shifted towards proinflationary risks. Main risks are related to a high uncertainty over the scale of secondary effects of the adopted tax decisions (primarily, the response of inflation expectations) and the external factors.

With regard to external conditions, accelerated yield growth in advanced economies and geopolitical factors may cause surges in volatility in financial markets and affect expectations for the exchange rate and inflation.




Wednesday July 18 2018
Russia Jobless Rate Holds Steady at Record Low
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russian unemployment rate came in at 4.7 percent in June 2018, unchanged from the previous month's record low and below last year's 5.1 percent, as the number of unemployed continued to fall.

The number of unemployed declined by 65 thousand to 3.543 million in June from 3.608 million in the previous month. Compared with the previous year, unemployment fell by 317 thousand from 3.860 million.

Real wages in Russia rose 7.2 percent year-on-year in June, easing from a revised 7.6 percent jump in the previous month and above market expectations of 7 percent. Average nominal wages surged 9.7 percent to RUB 45,840 while annual inflation rate stood at 2.3 percent, close to January's record low of 2.2 percent. Meanwhile, real disposable personal income in Russia increased by 0.2 percent in June, following a 0.1 percent gain in the previous month.




Thursday July 12 2018
Russia May Trade Surplus Smaller than Expected
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's trade surplus widened by 75.5 percent to USD 15.15 billion in May 2018 from USD 8.63 billion in the same month a year earlier, but still below market expectations of a USD 18.06 billion surplus.

Exports jumped 29.2 percent to USD 36.51 billion in May from USD 28.26 billion a year ago, as exports to non-CIS countries climbed 31.5 percent to USD 31.83 billion and those to CIS countries went up 15.6 percent to USD 4.68 billion. 

Imports went up at a softer 8.8 percent to USD 21.36 billion from USD 19.63 billion a year earlier. Imports from non-CIS countries increased 9.2 percent to USD 19.03 billion and those from CIS countries advanced 6.2 percent to USD 2.33 billion. 

The trade surplus with non-CIS countries grew 88.9 percent to USD 12.80 billion from USD 6.78 billion a year ago; and with CIS countries it widened 26.8 percent to USD 2.35 billion from USD 1.85 billion.

Considering January-May, the trade surplus widened to USD 75.09 billion from USD 50.92 billion in the same period of 2017.


Friday July 06 2018
Russia Inflation Rate Slows to 2.3% in June
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's annual inflation rate edged down to 2.3 percent in June 2018 from 2.4 percent in the previous month, still above market expectations of 2.2 percent.

Within the goods component, food cost dropped 0.2 percent in June, following a 0.4 percent rise in May; while prices of non-food products rose by 3.7 percent, faster than a 3.4 percent gain in the previous month. Also, services inflation went up to 4.1 percent in June from 4 percent in May.

Annual core inflation rate picked up to 2.3 percent in June from 2 percent in the previous period.

On a monthly basis, consumer prices increased by 0.5 percent in June, following a 0.4 percent advance in May and beating market expectations of 0.4 percent. Inflation rose for both food (0.4 percent vs -0.1 percent) and services (0.7 percent vs 0.4 percent), while non-food prices increased at a softer pace (0.4 percent vs 0.9 percent).


Wednesday June 20 2018
Russia May Jobless Rate Lowest Since 1992
Federal State Statistics Service | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The unemployment rate in Russia went down to 4.7 percent in May of 2018 from 5.2 percent in the corresponding month of the previous year, below market expectations of 4.9 percent. It was the lowest jobless rate since at least October 1992. In April, the jobless rate was higher at 4.9 percent.

The number of unemployed people decreased by 337 thousand to 3.608 million in May 2018 from 3.945 million in the same month of the previous year. Compared to April, the number of unemployed fell by 104 thousand.

Real wages grew 7.3 percent year-on-year in May of 2018, easing from a downwardly revised 7.6 percent rise in the previous month and missing market expectations of 7.5 percent. Average nominal wages went up 9.9 percent to RUB 43,815 while annual inflation rate stood at 2.4 percent, close to a record low of 2.2 percent in February and January. On the other hand, real disposable income increased by only 0.3 percent in May, following a 5.7 percent growth in the preceding month.


Monday June 18 2018
Russia GDP Growth Confirmed at 1.3% YoY in Q1
Federal State Statistics Service | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Russia's gross domestic product advanced by 1.3 percent year-on-year in the first quarter of 2018, matching the preliminary estimate and following a 0.9 percent growth in the previous period. The stronger expansion was mainly driven by gains in financial and insurance, real estate activities and public administration. In addition, output rebounded for manufacturing and mining.

The services sector contributed significantly to growth, as sharper rises were reported for: financial and insurance activities (5.9 percent from 5.3 percent in Q4); real estate activities (3.9 percent from 2.4 percent); public administration and defence; compulsory social security (2.3 percent from 0.8 percent) and professional, scientific and technical activities (2.8 percent from 2.2 percent). Meanwhile, wholesale and retail trade showed no growth (from 3.6 percent in Q4) and output slowed for transportation and storage (0.9 percent from 1.1 percent); accommodation and food service activities (3.4 percent from 3.9 percent); information and communication (0.3 percent from 7 percent) and administrative and support service activities (0.6 percent from 3.4 percent).

Within industrial activity, output recovered for: manufacturing (1.9 percent from -2.8 percent); mining and quarrying (0.7 percent from -0.9 percent); electricity, gas and steam, air conditioning (2.1 percent from -4.1 percent); water supply, water disposal, organization of waste collection and disposal, pollution control activities (0.2 percent from -1.8 percent). In contrast, the construction sector contracted (-5.1 percent from 1.7 percent).

In addition, agriculture, forestry and fishing shrank by 0.1 percent, compared to a 0.5 percent fall in the fourth quarter of 2017.


Friday June 15 2018
Russia Holds Policy Rate at 7.25%
Central Bank of the Russian Federation | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Russia held its benchmark one-week repo rate at 7.25 percent on June 15th, as widely expected, after revising the inflation forecast upwards due to a planned increase of the value added tax in 2019. Policymakers now expect annual inflation to be 3.5-4 percent in late 2018 and increase for a short-term period to 4-4.5 percent in 2019, before returning to 4 percent in early 2020.

Excerpts from the Information Notice of Bank of Russia:

Annual inflation in general corresponds to the Bank of Russia’s expectations. In April and May, the annual consumer price growth rate remained at the March level totalling 2.4%.

Inflation for main consumer basket product groups showed mixed dynamics. On the one hand, amid growing global oil prices coupled with the increase in excises early this year, the prices of oil products in the domestic market saw a tangible rise. This factor was the key contributor to the growth of annual inflation for non-food goods up to 3.4% in May (vs 2.7% in April). The adopted decision to lower the excises for oil products from 1 June 2018 will help to slow down the price growth for this product group by the end of this year. On the other hand, fruit and vegetable prices saw a substantial decline, which led to the drop in annual food inflation to 0.4% in May (vs 1.1% in April). This is related to continuing high supply of food products.

Inflation expectations of households and businesses saw a slight increase, which is primarily related to higher petrol prices. The weakening of ruble exchange rate in April moderately affects the dynamics of inflation and inflation expectations. In the coming months, prices will continue to adapt to the established level of the exchange rate and prices of oil products.

According to the Bank of Russia estimates, planned tax revisions will make about a 1 percentage point contribution to inflation. Partially this effect may take place this year.

The Bank of Russia forecasts annual inflation to be 3.5–4% in late 2018 and increase for a short-term period to 4–4.5% in 2019. The consumer price growth rate will return to 4% in early 2020.

2018 Q1 annual GDP growth was slightly below the March forecast, totalling 1.3%. This resulted from a slower than expected growth of fixed capital investment, including a decline in construction, together with the review of the data for 2017 by Rosstat. April saw improved investment and industrial activity, confirming the temporary nature of slower economic growth in March 2018. In view of this, the Bank of Russia kept unchanged its 2018 annual GDP growth forecast of 1.5–2%, which is in line with the potential economic growth rate. In 2019–2020, economic growth will stay close to the said figure. The Bank of Russia’s forecast might be further updated to reflect a detailed estimate of influence that the set of fiscal measures, announced on 14 June 2018, will have on economic performance. Although in the medium term if the scheduled measures are successfully implemented the expected economic growth could be faster compared to the Bank of Russia’s baseline forecast.