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. 




Monday September 11 2017
Russia July Trade Surplus Smallest in Nearly 14 Years
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's trade surplus narrowed by 36.3 percent to USD 3.97 billion in July 2017 from USD 6.24 billion in the same month a year earlier and way below market expectations of a USD 7.2 billion surplus. It was the smallest trade surplus since April 2003.

Imports went up 28.1 percent to USD 20.77 billion from USD 16.21 billion a year earlier. Imports from non-CIS countries climbed 28.2 percent to USD 18.57 billion and those from CIS countries advanced by 27.7 percent to USD 2.20 billion. 

Exports increased by a much slower 10.2 percent to USD 24.74 billion from USD 22.45 billion in July 2016, as exports to non-CIS countries advanced 8.2 percent to USD 20.96 billion while those to CIS countries went up 22.9 percent to USD 3.78 billion. 

The trade surplus with non-CIS countries shrank 51.1 percent to USD 2.39 billion from USD 4.89 billion a year ago while with CIS countries it widened 16.9 percent to USD 1.58 billion from USD 1.35 billion.




Tuesday September 05 2017
Russia Inflation Rate Falls to Lowest Since 1991
Federal State Statistics Service | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Russia increased 3.3 percent year-on-year in August of 2017, below a 3.9 percent rise in July and lower than market expectations of 3.7 percent. It is the smallest inflation rate since at least 1991, mainly due to a slowdown in cost of food and transport. The inflation stayed below the central bank's 4 percent target for the second month.

Prices rose at a slower pace for food and non-alcoholic beverages (2.3 percent from 3.8 percent in July); transport (4.2 percent from 4.3 percent); clothing and footwear (4.7 percent from 4.9 percent); furnishings and household equipment (1.9 percent from 2 percent); alcoholic beverages and tobacco (5.3 percent from 5.7 percent) and miscellaneous goods and services (2.9 percent from 3.52 percent). On the other hand, inflation was steady for hotels and restaurants (3.1 percent) and rose for housing and utilities (4.5 percent from 4.4 percent).

Annual core inflation rate declined to 3 percent from 3.3 percent in the previous month.

On a monthly basis, consumer prices went down 0.5 percent, the biggest monthly drop since at least 1992.




Thursday August 17 2017
Russia Jobless Rate Steady at 5.1% in July
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russian unemployment rate came in at 5.1 percent in July 2017, unchanged from the previous month's two-and-a-half-year low and down from 5.3 percent in the same period a year ago. The number of unemployed people decreased by 220 thousand from the previous year to 3.905 million.

The number of unemployed people fell by 220 thousand to 3.905 million from 4.125 million in the corresponding month of the previous year. Compared to June, the number of unemployed increased by 59 thousand from 3.846 million.

Real wages rose 4.6 percent year-on-year in July, following an upwardly revised 3.9 percent gain in June and beating market expectations of 3.1 percent. It was the sharpest increase in real wages since February 2014, as average nominal wages jumped 8.6 percent to RUB 39,355 while annual inflation rate slowed to 3.9 percent, the lowest since May 2012. Meanwhile, real disposable income dropped 0.9 percent.


Friday August 11 2017
Russia Q2 GDP Growth at Near 5-Year High
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's gross domestic product advanced 2.5 percent year-on-year in the second quarter of 2017, following a 0.5 percent growth in the previous period, a preliminary estimate showed.

It was the third straight three-month period of growth and the strongest pace of expansion since the third quarter of 2012.

The Ministry of Economic Development had previously estimated GDP growth in the second quarter of 2017 at 2.7 percent.

The central bank expects economic growth at 1.3 to 1.8 percent in 2017. In 2016, the Russian economy contracted by 0.2 percent.


Friday August 11 2017
Russia Trade Surplus Widens in June
Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's trade surplus increased by 8.1 percent to USD 8.69 billion in June 2017 from USD 8.04 billion in the same month a year earlier and above market expectations of a USD 7.5 billion surplus. Exports rose 22.8 percent to USD 29.52 billion and imports went up 30.2 percent to USD 20.83 billion.

Exports increased by 22.8 percent to USD 29.52 billion from USD 24.04 billion in June 2016, as exports to non-CIS countries advanced 21.8 percent to USD 25.04 billion while those to CIS countries went up 28.8 percent to USD 4.48 billion. 

Imports went up 30.2 percent to USD 20.83 billion from USD 16.00 billion a year earlier. Imports from non-CIS countries climbed 31.6 percent to USD 18.59 billion and those from CIS countries advanced by 19.2 percent to USD 2.24 billion.

The trade surplus with non-CIS countries edged up 0.1 percent to USD 6.45 billion from USD 6.44 billion a year ago while with CIS countries jumped 40.1 percent to USD 2.24 billion from USD 1.60 billion.


Friday August 04 2017
Russia Inflation Rate Lowest in Nearly 5 Years
Federal State Statistics Service | Joana Ferreira | joana.ferreira@tradingeconomics.com

Russia's consumer prices increased by 3.9 percent year-on-year in July 2017, easing from a 4.4 percent rise in the previous month and missing market expectations of 4.3 percent. The inflation rate fell below the central bank's 4 percent target for the first time since the bank switched to inflation targeting policy in late 2014, to hit the lowest level since May 2012. Prices increased at a slower pace for food and non-food products.

Prices rose at a slower pace for food and non-alcoholic beverages (3.8 percent from 4.9 percent in June); transport (4.3 percent from 4.6 percent); housing and utilities (4.4 percent from 4.9 percent); clothing and footwear (4.9 percent from 5.1 percent); furnishings and household equipment (2 percent from 2.2 percent); alcoholic beverages and tobacco (5.7 percent from 6.2 percent); hotels and restaurants (3.1 percent from 3.3 percent) and miscellaneous goods and services (3.2 percent from 3.5 percent). 

Annual core inflation rate declined to 3.3 percent from 3.5 percent in the previous month.

Month-on-month inflation slowed to 0.1 percent from 0.6 percent in June.


Friday July 28 2017
Russia Holds Key Interest Rate at 9%
Central Bank of the Russian Federation | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Central Bank of Russia held its benchmark one-week repo rate at 9 percent on July 28th, as widely expected, saying that short-term and mid-term inflation risks persist and that the decline of inflation expectations has come to a halt. The central bank also reiterated it will continue to conduct a moderately tight monetary policy to maintain inflation close to the 4 percent target and that there is still room for further rate cuts in the second half of 2017.

Information Notice of Bank of Russia:

Inflation remains close to the target. June saw a slight short-term rise in inflation to 4.4%, which came as a result of price movements in fruit and vegetables under the influence of bad weather conditions. At the same time, the trend towards sustainably low inflation remains in place. Growth rates of food product prices, but for fruit and vegetables, continued to slow, so did prices in the non-food product market and core inflation. Price growth rates continue to show consistency both across regions and in the consumer basket. This is reflected in the growing proportion of products and services posting price growth rates around 4%. In this environment, recovering consumer demand alongside the decline of its disinflationary effect brings no material risks. In the months ahead, as new harvest comes in, prices for fruit and vegetables are set to show a seasonal downward trend.

Consistent with expectations, the seasonal rise in prices on individual food products brought about a temporary halt in the decline of household and corporate inflation expectations. Their performance could also have been impacted by the traditional rise in regulated prices and tariffs.

The weakening of the ruble in June and July had no meaningful implications for annual inflation and inflation expectations, given its substantial strengthening observed since early this year. For inflation to become anchored close to the 4% target, sustainable decline in inflation expectations in required.

Monetary conditions are crucial in the efforts to bring about sustainably low inflation. They are adjusting to the key rate reduction. Interest rates on loans have declined but their level supports moderate demand for borrowing. Banks continue to adhere to a conservative policy by mitigating price and non-price lending conditions, primarily for reliable borrowers. The slowdown in the growth of household deposits mainly comes as a result of the declining paces of money supply growth, triggered by fiscal operations, rather than as a result of declining deposit rates. The Bank of Russia will continue to set such monetary conditions which will support the propensity to save and warrant balanced growth in consumption, thereby curbing inflation risks.

The economic activity is rebounding. Positive trends in industrial production are gaining momentum, freight turnover is growing, and construction has turned to recovery. Growth in household consumption expenditures went up along with the increase in investment and production. A moderate increase in consumer spending is not adding inflationary pressure as the supply of goods and services expands. Annual GDP is to grow by 1.3-1.8%.

At the same time, economic growth is nearing its potential level. It is constrained, among other things, by the situation in the labour market where shortages of labour force are already visible in some segments. Further GDP growth above 1.5-2% a year is attainable if structural reforms are put in place.

Short-term inflation risks persist as regards harvest prospects and their impact on food prices and inflation expectations. Furthermore, volatility in global commodity and financial markets, as well as exchange rate dynamics amid elevated geopolitical risks may have negative implications for exchange rate and inflation expectations.