Russia Econ 3q12
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Transcript of Russia Econ 3q12
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7/30/2019 Russia Econ 3q12
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RUSSIA
ECONOMIC SNAPSHOTMARKETBEAT
A Cushman & Wakefield Research PublicationQ3 2012
STRONG GROWTH CONTINUES
Growth slowed modestly in the first half of
the year, although it remained above trend.
The recent PMI surveys point at only a
marginal loss of momentum of the private
business sector in Q3. Given the
economys resilience to the ongoing euro zone crisis, the
authorities focused on fighting persistently high inflation by raising
interest rates in September. More monetary tightening is
expected to follow.
ROBUST CONSUMPTION
Consumers have continued to generate most of the growth
recorded in recent months. Unemployment fell further in August,
after reaching the pre-crisis level in April, and now stands at just
5.2%. The subsequent wage growth and rapid expansion of credit
to households continued in the summer, with personal rouble-
denominated loans up by 48% y/y in June and wages up by 7.8%
y/y in August. Inflation remains the main threat to sustainability of
the current level of consumption and is already affecting retail
sales, which averaged 4.7% in July and August, compared to
around 7% in H1. Inflation has risen on the back of the hikes in
utility prices and a disappointing harvest (which elevated theprices of food). CPI is unlikely to fall in line with the 6% target for
2012, despite the start of monetary tightening. Impending fiscal
cuts and planned creation of a reserve fund to accumulate profits
from oil and thus to reduce the countrys dependency on this
resource are likely to place more pressure on consumers.
WTO
Russia officially joined the WTO as the last of BRICs. The
accession is expected to help use the countrys solid domestic
market as a base for turning its manufacturers into exporters and
thus to reduce its reliance on energy and minerals. Being inside
this global trade club is also believed to have scope for improving
the perception of Russia as an investment market. Thus far,Russia has received less FDI than other emerging markets, with
the majority of inward investment aimed at getting around the
countrys tariff system and its customs-clearance procedures,
rather than at including Russia in the global supply chain.
OUTLOOKRobust domestic demand is expected to ensure sustained growth
this year while impending increases in oil prices should offset
planned fiscal tightening. A soft patch in exports is however
expected to continue, with pressures from abroad already
affecting manufacturing (through slower exports) and investment
(through foreign capital outflows due to global uncertainty).
MARKET OUTLOOK
GDP: Slower but healthy growth ahead.
Inflation: A substantial increase over H2. Moderationunlikely in the short term.
Interest rate: Hikes are likely to continue as inflationaryconcerns come to the fore.
Employment: Stable but may rise at the start of next year.
ECONOMIC SUMMARY
ECONOMIC INDICATORS* 2009 2010 2011 2012F
2013F
GDP growth -7.8 4.3 4.3 3.8 3.7
Consumer spending -5.1 5.1 6.7 5.4 4.6
Industrial production -9.3 8.2 4.8 3.6 4.0
Investment -14.4 5.8 8.0 6.7 7.2
Unemployment rate (%) 8.4 7.5 6.6 5.7 5.6
Inflation 11.6 6.8 8.4 6.6 5.9
Rouble/ (average) 45.3 41.2 41.9 40.9 39.1
Rouble/US$ (average) 31.8 30.4 29.4 31.2 30.8
Interest rates 3-month (%) 7.1 4.1 7.2 7.2 7.9
Interest rates 10-year (%) 8.0 7.4 8.5 7.6 7.9NOTE: *annual % growth rate unless otherwise indicated. E estimate F forecast
Source: Oxford Economics Ltd. and Consensus Economics Inc
ECONOMIC & POLITICAL BREAKDOWN
Population 142.9 million (2010)
GDP US$1,856.1 billion (2011)
Public sector balance 2.1% of GDP (2011)
Parliament The Medvedev-led United Russia partywith majority of seats in the Duma
President Vladimir Putin
Prime Minister Dmitry Medvedev
Election dates December 2016 (Parliamentary)
2018 (Presidential)
ECONOMIC ACTIVITY
Source: Cushman & Wakefield
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
-10.0
-5.0
0.0
5.0
10.0
2001 2003 2005 2007 2009 2011 2013 F
GDP GROWTH (annual %) - le ft INFLATION (annual %) - right
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