Russia Macro Monthly eport for August 2017: Economic Recovery Solidifies

Please find Russia Macro Monthly report for August 2017, prepared by Chris Weafer, Senior Partner at Macro-Advisory Ltd from Moscow. Short summary of the report:

Economic Recovery Solidifies

Economic recovery is solid. The Economy Ministry expects Q2 GDP growth may be 2.7%, bringing growth for 1H to 1.6% and ahead of consensus for the full year. That is still on the optimistic side. The Gaidar institute forecasts average growth at 1.5% for 2017 & 2018.

Driven by both investment and consumption. Q2 investment growth was faster than the 2.3% seen in Q1, while, in June, consumption grew by 1.2% YoY and looks set to strengthen in 2H. Confidence indicators weaker, but still positive. Manufacturing and services PMI are both still in expansionary territory, but not as high as earlier in the year. Lending to SMEs is recovering, according to CBR data, and the average interest rate is falling.

Sanctions. President Trump, reluctantly, signed the new sanctions bill into law. The new law does not immediately impose new sanctions but raises considerable concern over future expansion and adds to Russia risk uncertainty which may slow inward investment.

Muted Russian reaction. The government’s only reaction was to replicate the US expulsions of Russian diplomats (albeit a larger number) of last December. So far there are no signals of any further actions but that may change after the vacation period.

Far East Forum. The next major event will be the BRICS Forum in China in late August and the Far East Economic Forum in early September. Russia has simplified the visa process to attract delegates and clearly hopes to show strong Asian investor interest.

Odd Gunnar Skagestad's new book "From Lenin to Putin"

NRCC wishes a great summer holiday!

Finland's Chairmanship Program for the Arctic Council 2017-2019

Please find Finland's Chairmanship Program for the Arctic Council 2017-2019 "Exploring Common Solutions". 

Finland builds the 2017–2019 Chairmanship of the Arctic Council on strong Arctic traditions and expertise. International Arctic cooperation at the governmental level started at the first-ever Arctic ministerial meeting in Rovaniemi, in 1991.

Finland strives to increase the cooperation between the Arctic Council and the Arctic Economic Council to support the goal of facilitating business-to-business activities and responsible economic development. Common areas of interest include capacity building, risk management, connectivity, cold-climate technologies and services, maritime transport, energy, bioeconomy, tourism, housing and mining.

The Finland's Chairmanship Program for the Arctic Council covers Finland's priorities such as environmental protection, connectivity, meteorological and oceanographic cooperation, and education. Also, it has been discussed areas of work of the Arctic Council such as environment and climate, the seas, the people and strengthening arctic cooperation.  

Please download the full version ot the Finland's Chairmanship Program here. 

NRCC Annual report 2016, the NRCC Annual Accountancy report and the Auditor’s report for 2016

Dear members and partners of NRCC,

Enclosed please find the NRCC Annual report 2016, the NRCC Annual Accountancy report and the Auditor’s report for 2016.

We thank you all for active participation during 2016 in a challenging period in our bilateral economic relations.

Keep yourself updated after summer holidays about program content!

We wish you all a relaxing summer holiday, and are looking forward to seeing you soon again!

Please download here the NRCC Annual report 2015, the NRCC Annual accountancy report and the auditor’s report for 2015 in PDF format.

NRCC administration.

Russia Macro Monthly report for May 2017: Will sanctions threat damage the recovery?

Please find Russia Macro Monthly report for June 2017, prepared by Chris Weafer, Senior Partner at Macro-Advisory Ltd from Moscow. Short summary of the report:

Congress pushes ahead with sanctions threat. The big elephant in the room, when it comes to longer-term growth in the economy is the threat of additional US sanctions. Now that the Senate has voted for tougher sanctions, attention will shift to the House of Representatives and then whether President Trump is willing or able to block a sanctions extension. If a tougher sanctions regime is adopted by the US, the EU is not expected to follow but Russia will almost certainly retaliate in some way.

Economic recovery on track. Q1 GDP growth was 0.5% which, according to the Economy Minister, was really 1.0% adjusted for the calendar effect. The IMF upped its forecast to 1.4% while the Economy Minister is hoping for 2%. Business sentiment indicators remain strong, and 1Q investment growth of 2.8% suggests hopes for a more robust recovery are justified.

Budget increase. As expected, and despite repeated denials from the Finance Ministry, the government plans to spend some of the additional oil tax revenue this year. It is election year after all.

Nabiullina points to more rate cuts. The CBR Chairwoman said that she expected rates to settle at around 6.5% when inflation was stable at 4%. Rates are currently 9.25% and inflation is 4%. The CBR is expected to cut by 25-50 bps at its mid-June meeting.

Ruble may soon weaken. There is a clear divergence between the CBR and government ministers over where the ruble should trade. But the recent period of strength may now be ending as oil weakens, the risk of further sanctions increases and the CBR cuts rates.