Monday November 13 2017
Russia GDP Growth Slows to 1.8% in Q3
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's gross domestic product grew 1.8 percent year-on-year in the third quarter of 2017, slowing down from a 2.5 percent expansion reported in the previous period. The weaker expansion was likely caused by slower industrial production while other sectors like retail, construction and agriculture grew faster.

It was the fourth straight quarter of growth after two years of contraction. Still, the expansion slowed from a 2.5 percent advance in the second quarter, which was the best annual rate since the third quarter of 2012.
The Ministry of Economic Development had previously estimated GDP growth in the third quarter of 2017 at 2.2 percent.
For 2017, the government expects the economy to expand 2.2 percent while the central bank sees GDP growth at 1.7-2.2 percent.




Friday November 10 2017
Russia September Trade Surplus Larger than Expected
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's trade surplus widened by 37.1 percent to USD 10.22 billion in September 2017 from USD 7.46 billion in the same month a year earlier and way above market expectations of a USD 9.0 billion surplus.

Exports increased 20.7 percent to USD 30.65 billion from USD 25.39 billion in September 2016, as exports to non-CIS countries advanced 20.1 percent to USD 26.25 billion while those to CIS countries went up 24.6 percent to USD 4.40 billion. 

Imports went up at a slower 13.9 percent to USD 20.43 billion from USD 17.93 billion a year earlier. Imports from non-CIS countries climbed 13.1 percent to USD 18.21 billion and those from CIS countries advanced 21 percent to USD 2.21 billion. 

The trade surplus with non-CIS countries grew 39.7 percent to USD 8.03 billion from USD 5.75 billion a year ago; and with CIS countries it widened 28.5 percent to USD 2.19 billion from USD 1.70 billion.

In January to September, the trade surplus widened sharply to USD 80.41 billion from USD 62.98 billion in the same period of 2016.




Tuesday November 07 2017
Russia Inflation Rate Falls Further to Lowest on Record
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's consumer price inflation declined to 2.7 percent year-on-year in October 2017 from 3 percent in the previous month and below market expectations of 2.8 percent. It was the lowest inflation rate since the series began in 1991.

Prices rose at a slower pace for food and non-alcoholic beverages (1.2 percent from 1.6 percent in September); housing and utilities (4.3 percent from 4.4 percent); clothing and footwear (3.8 percent from 4.2 percent); furnishings and household equipment (1.6 percent from 1.7 percent); alcoholic beverages and tobacco (4.5 percent from 4.7 percent); hotels and restaurants (2.7 percent from 2.9 percent) and miscellaneous goods and services (2.3 percent from 2.6 percent). Meanwhile, transport inflation edged up to 4 percent from 3.9 percent in September.

Annual core inflation rate dropped to 2.5 percent from 2.8 percent in the previous month.

On a monthly basis, consumer prices rose 0.2 percent after a 0.1 percent fall in September, while markets were expecting a 0.3 percent gain.




Friday October 27 2017
Russia Cuts Policy Interest Rate to 8.25%
Central Bank of the Russian Federation | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Russia lowered its benchmark one-week repo rate by 25bps to 8.25 percent on October 27th, as widely expected, noting that inflation held close to its 4 percent target in recent months while economy continued to grow at a steady pace. The bank also said that further rate cuts are still on the table at its upcoming meetings.

Information Notice of Bank of Russia:

Annual inflation holds close to 4%. Estimates as of 23 October 2017 indicate that annual inflation is 2.7%. Its downward deviation against the forecast is driven mainly by temporary factors. In September, food prices showed stronger-than-expected annual price decline, on the back of larger supply of farm produce. This extra supply owes its origin to growing crop productivity and the shortage of warehouse facilities for long-term storage. The slowdown of inflation was also triggered by exchange rate movements.

Inflation is projected to be close to 3% by late 2017; going forward, as the temporary factors run their course, it will approach 4%.

Inflation expectations remain elevated. Their decline has yet to become sustainable and consistent.

According to Bank of Russia estimates, Q3 GDP growth continued in line with the forecast. Farm output increased while mechanical engineering output, freight turnover and the production of durable consumer goods all showed a positive trend. The recovery in consumption is becoming steadier. Consumer demand is shored up by real wage growth driven by inflation slowdown. Unemployment is at a level at which it does not affect inflation.

A number of factors bear the risk of inflation deviating from the target both upwards and downwards. On the short-term horizon, among these factors are food price movements triggered by the supply of farm produce. In the forthcoming months, food price growth will largely depend on crop quality and preservation. Price movements on global commodity markets pose a risk in the medium term if they deviate considerably upwards and downwards from the forecast. The fiscal rule will set off the impact of external economic conditions on inflation and the domestic economic environment as a whole.

Medium-term risks of inflation overshooting the target dominate over the risks of its persistent downward deviation. The main risk sources of inflation overshooting the target in the medium term remain unchanged. First, increasing structural labour shortage may cause labour productivity growth to considerably lag behind wage growth. Second, inflationary pressure may stem from households’ shrinking propensity to save. Third, inflation expectations remain elevated and subject to fluctuations caused by movements in prices of certain goods and services and the exchange rate.

Given the balance of risks for inflation the Bank of Russia’s ongoing transition from moderately tight to neutral monetary policy will be gradual.

Moving forward, the Bank of Russia’s key rate decisions will be based on its assessment on the balance of risks for inflation significantly and persistently deviating in either direction from the target, as well as the dynamics of economic activity against the forecast. The Bank of Russia Board of Directors leaves open the option of further rate reduction at its upcoming meetings.




Wednesday October 18 2017
Russian Jobless Rate Falls Less than Expected
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russian unemployment rate fell to 5 percent in September 2017 from 5.2 percent in the same month of the previous year but above market expectations of 4.9 percent.

The number of unemployed people fell by 200 thousand to 3.82 million from 4.02 million in the corresponding month of the previous year. Compared to August, the number of unemployed increased by 30 thousand from 3.79 million.

Real wages in Russia rose 2.6 percent year-on-year in September 2017, following a downwardly revised 2.4 percent gain in August and missing market expectations of 3.9 percent. Average nominal wages jumped 5.6 percent to RUB 37,520 while annual inflation rate slowed to 3 percent, the lowest since at least 1991. Meanwhile, real disposable income dropped 0.3 percent, the same pace as in August.




Thursday October 12 2017
Russia August Trade Surplus Larger than Expected
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's trade surplus widened by 42.7 percent to USD 6.612 billion in August 2017 from USD 4.633 billion in the same month a year earlier and way above market expectations of a USD 5.60 billion surplus.

Exports increased 25.3 percent to USD 28.97 billion from USD 23.11 billion in August 2016, as exports to non-CIS countries advanced 26.5 percent to USD 24.88 billion while those to CIS countries went up 18.8 percent to USD 4.09 billion. 

Imports went up at a slower 21 percent to USD 22.35 billion from USD 18.48 billion a year earlier. Imports from non-CIS countries climbed 21.5 percent to USD 20.17 billion and those from CIS countries advanced 16.8 percent to USD 2.18 billion. 

The trade surplus with non-CIS countries grew 53.8 percent to USD 4.71 billion from USD 3.06 billion a year ago; and with CIS countries it widened 21.1 percent to USD 1.90 billion from USD 1.57 billion.

In January to August, the trade surplus widened sharply to USD 70.19 billion from USD 55.52 billion in the same period of 2016.


Thursday October 05 2017
Russia Inflation Rate Falls to New Record Low
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's consumer price inflation eased to 3 percent year-on-year in September 2017 from 3.3 percent in the previous month and below market expectations of 3.1 percent. It was the lowest inflation rate since the series began in 1991.

Prices rose at a slower pace for food and non-alcoholic beverages (1.6 percent from 2.3 percent in August); transport (3.9 percent from 4.2 percent); housing and utilities (4.4 percent from 4.5 percent); clothing and footwear (4.2 percent from 4.7 percent); furnishings and household equipment (1.7 percent from 1.9 percent); alcoholic beverages and tobacco (4.7 percent from 5.3 percent); hotels and restaurants (2.9 percent from 3.1 percent) and miscellaneous goods and services (2.6 percent from 2.9 percent).

Annual core inflation rate declined to 2.8 percent from 3 percent in the previous month.

On a monthly basis, consumer prices went down 0.1 percent, while markets were expecting a 0.1 percent gain.


Tuesday September 19 2017
Russia Jobless Rate Drops Unexpectedly to 2-Year Low
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russian unemployment rate fell to 4.9 percent in August 2017 from 5.2 percent in the same month of the previous year and below market expectations of 5.1 percent. It was the lowest jobless rate since August 2014.

The number of unemployed people fell by 245 thousand to 3.792 million from 4.037 million in the corresponding month of the previous year. Compared to July, the number of unemployed decreased by 113 thousand from 3.905 million.

Real wages rose 3.7 percent year-on-year in August, following a downwardly revised 3.1 percent gain in July and missing market expectations of 4.2 percent. Average nominal wages jumped 7.1 percent to RUB 38,040 while annual inflation rate slowed to 3.3 percent, the lowest since at least 1991. Meanwhile, real disposable income dropped 0.3 percent.


Friday September 15 2017
Russia Cuts Key Interest Rate to 8.5%
Central Bank of the Russian Federation | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of Russia lowered its benchmark one-week repo rate by 50bps to 8.5 percent on September 15th, as widely expected, due to a quicker-than-expected slowdown in inflation. Policymakers also said that there is still room for further rate cuts over the next two quarters.

Information Notice of Bank of Russia:

Inflation stays close to 4%. In August, inflation totalled 3.3% following a short-lived rise to 4.4% in June. Inflation continues to decline in the non-food goods market; services price growth has stabilised around 4%. High homogeneity of inflation is maintained for consumer basket and across regions. Food price growth decelerates due to the seasonal cheapening of vegetables and fruit, which has exceeded preliminary estimates.

As inflation becomes lower, the contribution of volatile components, consisting of vegetable and fruit prices, among other things, to the general movement of the consumer price index becomes more pronounced. During 2018 short-term factors may cause inflation to deviate from the 4% both to the upside and to the downside. Noticeable changes in the prices for the consumer goods and services most often purchased by the population feed through to inflation expectations dynamics rather quickly. To keep inflation close to 4%, it is necessary to make inflation expectations less sensitive to price movements.

Monetary stance continues to support household propensity to save amid elevated economic activity and recovery in current incomes. Real bank rates remain in positive territory. Nominal lending rates continue to decline influenced by earlier key rate cuts, as well as those expected by market participants. Banks tend to ease non-price lending conditions on a case-by-case basis and continue to thoroughly select borrowers. Conservative approach employed by banks, coupled by moderately tight monetary policy, shapes conditions required for anchoring inflation close to 4% and for the further reduction in inflation expectations.

In Q2, GDP growth exceeded the forecast figures. Economic growth was spurred by investment and consumer demand along with the recovery of production inventories. Higher consumer demand under current monetary conditions does not pose significant inflation risks amid the expanding supply of goods and services. Q2 saw further growth in manufacturing output; construction began to rise. Trade, mining and transport made a major contribution to the accelerating economic growth. Certain industries experienced faster growth due to both persistent and one-off factors that will most likely have less influence during the next six months, which is in part supported by July statistics. In view of the positive trend set by Q2, the forecast for GDP growth in 2017 has been revised upwards to 1.7-2.2%.

The Bank of Russia’s assessment of the medium-term economic development remains the same. The economy is close to its potential. Growth might be constrained by insufficient production capacity together with the possible skilled labour shortages affecting certain segments of the labour market. Further GDP growth above 1.5-2% a year is attainable if structural reforms are put in place.

Key sources of medium-term inflation risks remain unchanged. First, there are potential price fluctuations in global commodity markets. Implementation of the budget rule will reduce risks linked to oil price movements. Second, labour productivity growth may lag considerably behind the wage growth as the structural shortage of labour force aggravates. Third, inflationary pressure may stem from changes in households’ behaviour as the propensity to save becomes much lower. Fourth, inflation expectations remain highly sensitive to changing prices for individual groups of goods and services and exchange rate movements.


Monday September 11 2017
Russia Q2 GDP Growth Rate Confirmed at Near 5-Year High
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's gross domestic product advanced 2.5 percent year-on-year in the second quarter of 2017, unrevised from the preliminary estimate and following a 0.5 percent growth in the previous period, final figures showed. It was the strongest pace of expansion since the third quarter of 2012, as output grew firmly for wholesale and retail trade, mining, manufacturing and construction.

It was the third straight three-month period of growth and the strongest pace of expansion since the third quarter of 2012. Within services, output was driven by: Wholesale and retail trade (4.7 percent from 0.2 percent in Q1); real estate activities (2.7 percent from -0.9 percent); transportation and storage (3.7 percent from 3.3 percent); information and communication activities (4.1 percent from -2.3 percent); financial and insurance activities (2.7 percent from 0.1 percent); and administrative and related additional services (2.2 percent from -1 percent).

Also, industrial production contributed positively to growth with all categories expanding: Mining (4.6 percent from 4.1 percent in Q1); manufacturing (1.2 percent from 1 percent); construction (2.8 percent from -4.5 percent); electricity, gas and steam, air conditioning (2 percent from 0.9 percent); and water supply, water disposal, organization of waste collection and disposal, pollution control activities (0.9 percent from -3.7 percent).

Agriculture advanced slightly by 0.1 percent after contracting by 0.9 percent in the first quarter.

In the first half of the year GDP rose 1.5 percent, compared with a 0.5 percent contraction in the same period of 2016.

The central bank expects economic growth at 1.3 to 1.8 percent in 2017.