Some Dark Clouds Blot the New Year Sunshine

Some reasons for optimism into Christmas. Since the US Presidential election and the rollout of the anti-Covid vaccine in November, the ruble has rallied 10% against the US dollar and the RTS Index has jumped 33%. Russia is cited as the second most attractive investment story (cheap, stable, and long-term growth) coming into 2021.

Russia Macro Monthly November 2020

Relief bounce. Russian equity indices and the ruble have recorded double-digit gains since the start of November. This is because of the oil price rally, itself driven by optimism that Covid vaccines will be available early in 2021, and because the decline seen in September and October is deemed excessive by traders.

Russia Macro Monthly October 2020

Moved into active recovery spend phase. The government has moved into the more proactive phase of its plan to restore economic activity to pre-Covid level. The US$100 billion program started October 1st.

Russia Macro Monthly August 2020

Economy less bad than expected. The Russian economy contracted by 8.5% YoY in 2Q20, with weakness in “all areas except agriculture”, according to Rosstat. This decline is better than had been predicted and confirms the recovery trend seen in June, when GDP fell 6.4% YoY.

Russia Macro Monthly June 2020

National Recovery Plan (NPR). The government presented the recovery plan for the economy. It is due to start on July 1st and has a target of restoring growth to at least 2.5% by end 2021. The total cost
is estimated at under 5% of last year’s GDP (see separate report).

Russia Macro Monthly February 2020

Presidential bombshell. News in January and early February was dominated by President Putin’s Federal Assembly Address and the subsequent changes in the cabinet. The President committed to additional social spending of US$31 billion over the next four years.

Preview 2020: The Edge of Tomorrow?

This is the second part of our Preview 2020 series. Part 1 of the series considered the oil price outlook while Part 3 will look at domestic politics. We will issue Part 3 after President Putin’s address to the Federal Assembly, which will take place on January 15th.

Russia Macro Monthly November 2019

A little more light. Although GDP expanded by less than 1.0% in 1H19, the preliminary data for 3Q19 shows a bigger bounce. That recovery is not expected  to last in 4Q19 but there is now more optimism that the trend is picking up.

Russia Macro Monthly October 2019

Getting more serious about growth. Having spent the past nine months waiting for the pace of economic recovery to strengthen, the government is finally becoming more proactive in the search of actions that may act as a catalyst to boost growth and incomes. It is far too early to consider this any sort of panic move, but that may come next year if the actions now being considered fail to deliver.

Russia Macro Monthly September 2019

Beneficiary of oil spike. Russia is a beneficiary of the oil price spike following the Saudi attack. But this type of event tends to have a short-lived impact, although it should add to factors supporting Brent close to, if not above, US$60/bbl through winter. Given the budget will break even at US$49/bbl this year, this price average will ensure another big surplus.