Thoughts from a
Renaissance man
Economics & Strategy
23 July 2015
Charles Robertson
+44 (207) 367-8235
[email protected]
Mobile +44 7747 118 756
@RenCapMan
Oleg Kouzmin
+7 (495) 258-7770 x4506
[email protected]
Thoughts from a Renaissance man
Russia – 4% CPI before Putin’s fourth term?
With Russian wages now competitive with China’s, we see a potential shift by Russia from a
commodity-exporting service economy to a more diversified industrial economy such as Mexico.
Russia may be beating Brazil, Turkey and SA on inflation by end-2016…
Drawing out a positive theme from recent meetings in Russia took about a week, but was finally achieved without excessive
alcoholic damage to my liver or dramatic flights of fancy. President Vladimir Putin offered only a little assistance at his annual
address to the St Petersburg International Economic Forum (SPIEF). More helpful was the new intake of impressive reformers at
the central bank and government ministries. Russia appears to be targeting Mexico – in the friendliest possible way – as a
successful model of anti-inflationary policy. The aim is to push inflation back down from 15-16% to 4%. This could make Russian
local currency bonds (now with a 10.4% yield for 10 years) an attractive investment after 3Q15 rouble depreciation – and through
2016, we believe this could cut bond yields to 6-7% and lift Russian equities by 25-100%.
…thanks to high interest rates, a large output gap and public sector wage caps
Officials point out that in 2Q15, annualised quarterly inflation was already running close to 4%. The Central Bank of Russia (CBR)’s
key interest rate of 11.5% is far above this, and with GDP shrinking 3-4% this year and oil prices down 45% YtD, we think this is a
pretty aggressive stance, even reminiscent of US treasury secretary Volcker in the early 1980s. The finance ministry is planning 0%
change in public sector salaries from October 2015 to September 2016 (despite Duma elections that month) and may cut pension
increases to 5.5% in 2016, i.e. well below the previous year’s inflation rate (we estimate it at 11%). With a hefty output gap, we
believe the scene is set for headline CPI at 15-16% to fall a long way towards the CBR’s 4% inflation target.
The liberals’ guerrilla war strategy is supportive too
Since 2013, when the Kremlin gave up on Western-style privatisation (see Russia Tacks left, published 5 July 2013), we see the
economic liberals’ strategy as one of guerrilla warfare rather than outright confrontation with vested interests. They hope to force
reform on the state-owned oligopolies from two directions: from the top-down, tariff increases will be minimised to help meet the
inflation target. From the bottom up, Russia will pursue ease-of-doing business reforms so that the economy will become
structurally more competitive. Putin’s SPIEF promise of tax stability, and a “holiday” from investigations are supportive of the
latter, and via greater competition, again this is supportive of the anti-inflation strategy.
From 2017 we think the RUB might become stable in real terms – like the MXN since 2003
The rouble should suffer less long-term nominal depreciation if this inflation goal can be achieved. The authorities hope that a
more stable rouble, lower inflation and lower interest rates should boost Russia’s investment rate from an IMF forecast of 18%
this year while supporting growth, as bond yields fall into single digits (helping a mortgage market that is just 5% of GDP).
We do not assume miracles. There is a consensus now that demographics will keep Russian growth around 2%. The CBR’s
ambition to rebuild FX reserves means there are asymmetric FX risks – if oil falls, the rouble will weaken, but if oil rises, FX
reserves could be rebuilt. Meanwhile, Mexico as the model for Russia does not imply any improvement in the legal system, while
it is irrelevant when it comes to geopolitics – which we assume stabilises around the status quo (no land-bridge to Crimea and no
easing of sanctions). Our Russia economist Oleg Kouzmin is sceptical that Russia’s corporate environment is sufficiently
competitive to secure 4% inflation, and food prices remain a wildcard as Russia has been blessed by two good harvests in a row
and good weather never lasts forever. However, even if Russia can cut headline CPI from 15-16% today to only 5% in 2017, we
believe this should be sufficient to cut long-term interest rates to 6-8% and would support bonds and equities.
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Renaissance Capital
23 July 2015
Thoughts from a Renaissance man
Our key take-away from our Moscow conference, related macro meetings and SPIEF was
that Russia’s reformers aim to hit a 4% inflation rate over the coming one to two years.
This would be a significant shift on the past decade, and on IMF expectations. Based on
IMF average inflation data and forecasts from 2004-2017, Russia’s average will be c. 10%
compared with 8% for Turkey, 5-6% for SA and Brazil and just 4% for Mexico.
Figure 1: Russia’s inflation performance is poor relative to peers
Average CPI (2004-17)
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Russia
Turkey
Brazil
SA
Mexico
Source: IMF
For the 12-year period 2004-2015, only Turkey has succeeded more than once in toppling
Russia as the worst inflation performer among the largest EEMEA and LatAm economies.
Figure 2: Among peers, Mexico is consistently best and Russia generally worst (sometimes Turkey)
Average inflation % ch YoY (IMF plus RenCap for Russia)
Brazil
Mexico
Russia
SA
Turkey
Russia (RenCap)
20.0
15.0
10.0
5.0
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: IMF, Renaissance Capital
If Russia can meet the CBR’s inflation target, the government’s hope is that this will lift its
investment rate, which in recent years has been at the bottom of this peer group, with
Turkey. The IMF forecasts Mexico’s total investment ratio this year at 21% of GDP,
against 18% for Russia.
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23 July 2015
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Figure 3: Investment as % of GDP
Brazil
Mexico
Russia
South Africa
Turkey
30
28
Russia's investment
high with high oil
26
24
22
20
18
16
14
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: IMF
That in turn may then support Russia’s per capita GDP. The IMF does not currently
assume Russia’s per capita GDP will exceed Mexico’s over 2015-2017; at present it is
also expected to be below Brazil and Turkey.
Figure 4: Per capita GDP in current dollars
Brazil
Mexico
Russia
South Africa
Turkey
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: IMF
For reasons outlined on the front page, Oleg Kouzmin thinks 5% inflation in 2017 is more
likely than 4%. Upside risks include the oil price fall pulling the rouble weaker, or a poor
harvest in 2016 or 2017 driving up food prices. In addition, we think that in 2017 there will
be pressure to raise wages so that Putin can maximise his vote in the March 2018
presidential election. Also, as we pointed out in Who can cope with a shrinking workforce,
published 23 September 2014, Russian demographics are likely to put upward pressure
on wages, although immigration could help reduce this pressure.
We think the CBR may hit its target if GDP undershoots our 2% growth target for 2016
(which assumes average oil prices at $75-80/bl). If oil averages $60/bl, we see 0-1%
growth only. Inflation may also be lower if the CBR backs away from its currency
intervention position and if US or European sanctions are eased, allowing more capital
inflow to Russia, which could push the rouble stronger.
We assume the CBR will cut the key rate from 11.5% to 10% by end-2015 and 6.5% by
end-2016. A slower pace of reductions could also help cut inflation more than we currently
assume.
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23 July 2015
Thoughts from a Renaissance man
In the medium to long term, Russia does not want to copy Turkey’s interest rate policy,
which is too loose to meet the inflation target. It also hopes to avoid the high real interest
rate policies that Brazil has needed to keep inflation in check. We assume the key policy
rate will be broadly 2 ppts above inflation over the long-term, with the end-2016 level at
6.5% justified by the output gap. Beyond that, a policy rate of closer to 7% would be
justified by inflation above our forecasts, while a 6% policy rate is more realistic if the CBR
is able to consistently meet its target.
Financial market implications
We can imagine a flat yield to gently rising yield curve around the 6-7% mark for 10-year
local currency bonds in 2016 if markets price in this inflation outlook. Note that we see risks
of the rouble selling off as we head into September, owing to dividend outflows and external
debt repayments, and the possible Fed hike does not help the rouble either in the short
term, so we would expect a positive bond trend to only emerge after September 2015.
Our equity analysts’ initial estimated effects from a lower risk-free rate could potentially lift
Russian equities by 25-100%, with the highest gains plausible for banks and utilities names.
Structural change
The real key to make us more optimistic about Russian inflation is structural change in the
make-up of the economy. As we argued in 2013, Russia is not comparable with Australia
or Canada (even in the 1960s) as the economy is too state-centric. Meanwhile its savings
are too low for Russia to be a China. For this reason, the decision to drop the privatisation
agenda in 2013 was a mistake in our view. China can manage relatively high growth while
subsidising large state-owned enterprises through the plentiful savings in its banking
system. Every time those savings try to escape, into gold, or housing, or the stock market,
the authorities come in and cap the gains (or prevent an excessive fall) to keep the model
broadly on track. Russia’s savings are too low, meaning it needs high commodity prices to
subsidise state companies or foreign borrowing. The former has unwound and the latter is
now harder to come by, so Russia does not have access to cheap money.
Lastly, Russia is not oil-rich like Saudi Arabia. Its oil production per capita is similar to
Canada, less than 20% of Saudi levels and less than 10% of Kuwait levels. In terms of the
impact of oil on the fiscal space, or on Russia’s political structure, we think it is closer to
Mexico than the Gulf States.
400
350
Left-hand scale capped at 400
300
When countries are large net exporters of energy, then they tend to be autocracies as defined
by Polity IV or Not Free as defined by Freedom House.
250
200
150
The exceptions are those like Norway that were rich democracies before they exported energy.
100
50
Chad (-2)
Mexico (8)
Nigeria (4)
Colombia (7)
Turkmenistan (-8)
Ecuador (5)
Iran (-7)
Algeria (2)
Libya (na)
Russia (4)
Canada (10)
Trinidad & Tob. (10)
Venezuela (4)
Congo, Rep. (-4)
Angola (-2)
Gabon (3)
Iraq (3)
Azerbaijan (-7)
Kazakhstan (-6)
Oman (-8)
Brunei (NF)
Saudi Arabia (-10)
UAE (-8)
Norway (10)
Eq.Guinea (-5)
Kuwait (-7)
0
Qatar (-10)
Population divided by net exports of oil '000
bpd
Figure 5: Countries ranked by oil exports per capita (lhs), and coloured by Polity IV rating of Strong Autocracy (-10) to Full Democracy (+10)
Source: IMF (population), BP (oil production and consumption 2014), EIA (consumption 2013), Polity IV
4
Renaissance Capital
23 July 2015
Thoughts from a Renaissance man
This then helps explain why Russian officials seem loath to see the rouble appreciate
back through RUB50/$. Russia needs to diversify and having cheaper wages should help
it do this. If the data we have collected in the following chart bears any resemblance to
reality, then Russian salaries may now be less than China’s. This does not reflect total
hourly labour costs, which in many post-communist countries tends to be much higher
owing to social security contributions imposed on companies.
Figure 6: Russia's wages in manufacturing may now be lower than China's
Average monthly salary in US dollars
2014
2015 (Jan-May)
2013
2012
Mexico
2011
2010
2009
Brazil
2008
2007
2006
SA
2005
2004
2003
India
2002
2001
2000
1999
China
1998
1997
1995
1990
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1996
Russia
Note: The methodology behind these figures is unlikely to be consistent
Source: OECD, Russian statistics office, BLS, National Bureau of Statistics of China
We have no doubt that Russia would prefer to see productivity gains to compete with
China, rather than indulge in a race to the bottom on wages. To achieve that goal, and to
force Russia’s state-owned enterprises (SOEs) to become more competitive, the
economic liberals in Russia want to see small- and medium-sized businesses (SMEs)
grow in importance and size. SPIEF estimates that about 50% of GDP in the US comes
from SMEs and 70% in the EU, but just 20% in Russia and only 30% of employment.
Russia has already enacted reforms that put it in 34th place globally when it comes to
“starting a new business”. In this specific category of the Ease of Doing Business World
Bank survey, Russia was in 111th place in 2012, when we wrote on Putin’s ambition to
move Russia’s headline ranking from 120th place in 2012 to 20th place in 2018 (see
Everyone’s a Winner, published 9 May 2012). We expect further improvement in coming
years.
In addition, Putin promised at SPIEF that “small businesses that have never had any
serious violations of the rules in the past will be freed from inspections for a three-year
period”, implying fewer officials demanding bribes. He declared there will be tax stability
until 2018 and that a corporation will be set up to develop SMEs. Putin also said “we
decided to introduce tax holidays for individual entrepreneurs, offer small and mediumsized business special tax regimes that significantly reduce their tax burdens, and give tax
breaks to greenfield industrial companies”.
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Paying taxes
Resolving insolvency
Turkey
Enforcing contracts
SA
Trading across borders
Russia
Protecting minority
investors
Mexico
Registering property
Dealing with construction
permits
Starting a new business
Overall EODB rank
Getting electricity
Brazil
200
180
160
140
120
100
80
60
40
20
0
Getting credit
Figure 7: Russia is now competitive with peers on some Ease of Doing Business measures, 2015
Source: World Bank
Comparing Russia to Mexico makes sense beyond just the inflation target, in our view.
Both countries export oil, both are neighbours to powerful economic entities (the
Eurozone and US, respectively) and both are part of different civilizational poles from
those entities, as defined by Samuel Huntington.
As shown below, both have a similar approach on the fiscal side. It is a comparison this
economist was making a decade ago (but had since forgotten!).
Figure 8: Russia runs tight fiscal policy like Mexico, but has a lower public debt burden
Russia and Mexico , public debt and budget balance as % of GDP
Mexico govt gross debt
Russia govt gross debt
Mexico budget
Russia budget
60
50
40
30
20
10
0
-10
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: IMF
Where Russia does better is on the current account – owing to higher energy exports –
but that is offset by capital flight.
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23 July 2015
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Figure 9: Russia's current account surplus is stronger than Mexico's as a % of GDP
Mexico
12
Russia
10
8
6
4
2
0
-2
-4
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: IMF
The next key question for investors is what this means for the rouble.
At first glance, Mexico seems to have achieved very little from its low inflation rate.
From early 2004 to early 2014, the Mexican peso had depreciated just as much in
nominal terms as the rouble or the rand against the US dollar (with all rebased to 3
May 2004).
Figure 10: Nominal exchange rate to US dollar, rebased where 1 = exchange rate on 3 May 2004
Brazil
South Africa
Russia
Commodity Currency (AUD, CAD, NZD) average
Mexico
2.50
2.30
Weak
2.10
1.90
1.70
Where 1.00 = 3 May 2004
1.50
1.30
1.10
0.90
0.70
Strong
May-15
Jan-15
Sep-14
Jan-14
May-14
Sep-13
May-13
Jan-13
Sep-12
Jan-12
May-12
Sep-11
May-11
Jan-11
Sep-10
Jan-10
May-10
Sep-09
Jan-09
May-09
Sep-08
May-08
Jan-08
Sep-07
Jan-07
May-07
Sep-06
May-06
Jan-06
Sep-05
Jan-05
May-05
Sep-04
May-04
0.50
Source: Bloomberg
To show this another way, in 2003-2013, the MXNRUB rate was pretty stable at
around RUB2.5/MXN – a period when oil prices were rising or high, which benefited
Russia more than Mexico.
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Figure 11: The RUB was strong vs the MXN until 2013
5.0
4.5
4.0
3.5
3.0
2.5
2.0
Jul-14
Feb-15
Dec-13
Oct-12
May-13
Mar-12
Jan-11
Aug-11
Jun-10
Apr-09
Nov-09
Sep-08
Jul-07
Feb-08
Dec-06
Oct-05
May-06
Mar-05
Jan-04
Aug-04
Jun-03
Apr-02
Nov-02
Sep-01
Jul-00
Feb-01
1.5
Source: Bloomberg
But MXN nominal depreciation against the US dollar exaggerates what has happened
to Mexico – given US dollar appreciation against most currencies.
A more realistic overall picture can be seen when we compare the real effective
exchange rates of Mexico and Russia. This shows that what Mexico has achieved is
pretty impressive over 15 years. The currency has simply depreciated in nominal terms to
the same extent as the inflation differential against its main trading partners. If we
assume that Mexico might have increased productivity by more than its trading partners,
it suggests that Mexico has actually become more competitive in the past 15 years.
Figure 12: Mexico has achieved real effective exchange rate stability for nearly 15 years
Real effective exchange rates since 2000
RUB real effective exchange rate
MXN real effective exchange rate
350
300
250
200
150
100
50
Jan-11
Aug-11
Mar-12
Oct-12
May-13
Dec-13
Jul-14
Feb-15
Jan-04
Aug-04
Mar-05
Oct-05
May-06
Dec-06
Jul-07
Feb-08
Sep-08
Apr-09
Nov-09
Jun-10
Jul-00
Feb-01
Sep-01
Apr-02
Nov-02
Jun-03
0
Source: Bloomberg
Russia, by contrast, has seen significant real currency appreciation. Admittedly it was
deeply undervalued in 1998, so a few years of appreciation was probably justified, but
this has now ended in significant volatility. None of this is good news for the investment
climate. It fed into competitiveness problems for Russian industry and threatened to
turn Russia into a commodity-exporting service economy, while Mexico diversified into
manufacturing.
The implication is that if Russia can get inflation down to 4-5%, then we may see
rouble depreciation from 2017 onwards begin to average some 2-4% a year,
against an inflation rate of 1-2% among its key Western trading partners. For
portfolio investors as well as direct investors that may look attractive, especially when
compared with the present day, when the rouble merely trades on the back of oil
prices.
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23 July 2015
Thoughts from a Renaissance man
As this report has turned out to be a little longer than we expected – we will add only a
few more interesting graphs.
Russia’s legal system has a score of 45/100 on our legal scoreboard, while Mexico’s is
47. Both also under-perform their peers when their per capita GDP is taken into account.
100
90
96
96
95
95
94
94
94
94
94
93
93
93
92
91
90
89
89
85
85
84
84
82
81
Figure 13: Renaissance Capital legal scoreboard – 2015
Purple = MSCI DM
Blue = MSCI EM
Green = MSCI Frontier
Yellow = Beyond Frontier
74
71
70
68
68
68
67
65
64
62
61
60
59
58
56
52
51
51
50
47
46
46
45
44
42
42
42
42
41
41
40
39
39
37
37
37
36
36
34
33
80
Mexico's legal score (47)
similar to Russia (45)
70
60
50
28
26
21
21
19
17
16
16
16
12
40
30
7
6
20
10
Zimbabwe
Bangladesh
Venezuela
Egypt
Nigeria
Uganda
Ukraine
Indonesia
Cote d'Ivoire
Peru
Lebanon
Ghana
Morocco
Colombia
China
Philippines
Mexico
Mongolia
UAE
Brazil
Georgia
Bulgaria
Malaysia
Italy
Romania
Chile
Poland
Portugal
US
France
Belgium
Japan
Canada
Sweden
Australia
Germany
Norway
Denmark
0
Source: Renaissance Capital
As you may recall from our Are you constrained by the law report, published 31 March
2015, our score is derived by merging the country scores of the World Justice Project
(WJP), with the combined score each country has from two legal measures in the
EODB rankings.
Russia and Mexico are very similar, with a poor WJP score but with a relatively good
score from the EODB. So their legal systems are flawed, but the judicial system is
relatively business-friendly.
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Figure 14: Russia and Mexico have weak legal scores, but business-friendly judiciaries
0.9
Norway
Denmark
WJP score vs average EODB rank for
resolving insolvency and enforcing contracts
Sweden
Finland
Netherlands
New Zealand
Austria
Australia
Germany
Singapore
Japan
Korea
HK
Belgium
0.8
STRONG LEGAL
SYSTEM
Canada
UK
Estonia
France
US
0.7
Chile
Czech Rep Poland
Spain Botswana
Portugal
Slovenia
UAE
R² = 0.6064
WJP score
Italy
0.6
BUSINESS
FRIENDLY
Hungary
Romania
Georgia
Greece
MalaysiaCroatia
South Africa
Thailand
Bulgaria
Tunisia
Ghana
Jordan
Brazil
Jamaica
Mongolia
Morocco
Serbia Turkey
Argentina
Philippines
Peru Colombia
Vietnam
Ukraine
Zambia
Kazakhstan Tanzania
Cote d'Ivoire
China
RussiaMexico
Iran
0.5
Indonesia
Sri Lanka
Lebanon
India
Egypt
Kenya
Ethiopia
Uganda
Myanmar
Bangladesh
Cambodia
Nigeria
0.4
WEAK LEGAL
SYSTEM
UNFRIENDLY TO
BUSINESS
Pakistan
Zimbabwe
Venezuela
0.3
0
20
40
60
80
100
120
Average rank in two chapters of WB EODB 2015 report
140
160
180
Source: World Justice Project, World Bank
The WJP score for Mexico is burdened by the high crime rate in that country. To our
surprise, the homicide rate in Mexico is now roughly double that of Russia. Russia’s fall
might well accelerate in coming years as the number of 20-24 year olds for example
shrinks from 11.6mn in 2012 to 6.6mn in 2022, based on UN data. We include a few
countries in the following graph – leaving out the very low rate of the UAE, and also
excluding Saudi Arabia or Iran (with mid-single digit homicide rates).
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Figure 15: Homicide rates in certain EEMEA, LatAm and the US, per 100,000
2000
2001
2002
2003
2004
2005
2006
50
40
30
20
Nigeria was
10.3 in 2012
10
0
Russia
Mexico
Brazil
USA
Pakistan
Kenya
SA
Turkey
Egypt
Source: UN
We do not assume a great improvement in Russia’s legal score despite Putin’s
promise at SPIEF to adopt best-practice legal systems. As we wrote in Are you
constrained by the law, legal systems that guarantee immunity to the head of state
tend to get lower scores than others and are harder to improve.
Conclusion
To conclude – the key message the authorities want to convey is that Russian inflation
could be slashed in one to two years and if the CBR meets its targets, Russia would
look better than Brazil, Turkey or South Africa, assuming no improvement in their
inflation record.
Russia is intent on also retaining the competitiveness gains from the 2014 rouble
depreciation, which has pushed salary levels below many EM peers. This means there
is more depreciation risk than appreciation risk over 2015-2016.
We assume that if Russia brings inflation down significantly, and we do believe that 5%
inflation can be achieved in 2017 – then the rouble may become less volatile in real
effective exchange rate terms. This might imply nominal depreciation of just 3% a year
from 2017 onwards, if our inflation forecasts are right, or just 2% if the CBR hits its
inflation target.
We expect Russia’s structural change to come from the bottom up, as new start-ups
bring competition to the real economy.
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23 July 2015
Thoughts from a Renaissance man
Figure 16: Russia – key economic indicators
Ratings (M/S&P/F): Ba1/BB+/BBB2003
Activity
Real GDP (% YoY)
Private consumption (% YoY)
Government consumption (% YoY)
Investment (% YoY)
Industrial production (% YoY)
Unemployment rate (% YoY)
Nominal GDP (RUBbn)
Nominal GDP ($bn)
Population (mn)
GDP per capita ($)
Gross domestic saving (% of GDP)
Stock of bank credit to corp/households
(RUBbn)
Stock of bank credit to corp/households
(% of GDP)
Deposits (RUBbn)
Loan-to-deposit ratio
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015E
2016E
7.3
7.2
6.4
8.2
8.5
5.2
-7.8
4.5
4.3
3.4
1.3
0.6
-3.6
1.8
7.7
12.5
12.2
12.2
14.3
10.6
-5.1
5.1
6.4
6.8
5.0
1.3
-5.5
2.0
2.4
2.1
1.4
2.3
2.7
3.4
-0.6
-1.5
1.4
2.6
1.1
-0.1
-1.9
-1.2
12.5
13.7
10.9
16.7
21.0
10.6
-14.4
5.9
9.1
6.7
0.9
-2.0
-9.8
3.5
8.9
8.0
5.1
6.3
6.8
0.8
-9.2
8.3
4.8
2.5
0.3
1.7
-3.2
2.4
8.2
7.8
7.2
7.2
6.1
6.3
8.4
7.5
6.6
5.5
5.6
5.3
6.5
5.9
13,208 17,027 21,610 26,917 33,248 41,277 38,807 46,309 55,800 61,811 66,689 71,406 76,228 85,177
430
591
764
990
1,299 1,658 1,224 1,523 1,898 1,994 2,091 1,850 1,326 1,610
144.3 143.8 143.2 142.8 142.8 142.7 142.9 142.9 143.0 143.3 143.3 143.7 146.8 147.1
2,982 4,111 5,332 6,930 9,095 11,617 8,567 10,660 13,272 13,914 14,589 12,873 9,031 10,946
28.3
30.4
30.5
30.4
30.9
30.3
21.3
26.1
29.5
27.2
23.3
23.0
22.9
24.6
2,733
3,945
5,540
8,183
12,506 16,861 16,454 18,616 23,954 28,657 33,700 37,744 37,933 40,588
20.7
23.2
25.6
30.4
2,782
98.2
3,728
105.8
5,170
107.2
7,306
112.0
Prices
CPI (average % YoY)
CPI (end-year % YoY)
Nominal wages (monthly), RUB
Wage rates (% YoY, nominal)
13.7
12.0
5,499
26.1
10.9
11.7
6,740
22.6
12.7
10.9
8,555
26.9
9.7
9.0
14.1
11.7
6.9
8.4
5.1
6.8
7.8
14.8
7.1
9.0
11.9
13.3
8.8
8.8
6.1
6.6
6.5
11.4
11.1
6.7
10,634 13,593 17,290 18,639 20,950 23,532 26,803 30,234 33,106 34,794 35,679
24.3
27.8
27.2
7.8
12.4
12.2
13.9
12.8
9.5
5.1
4.1
Fiscal balance
Consolidated government balance (% of GDP)
Total public debt (% of GDP)
1.7
29.8
4.3
22.5
7.5
14.8
7.4
8.9
5.4
7.1
4.1
5.2
-5.9
9.4
-4.0
9.6
0.8
9.9
0.0
10.0
-0.8
11.4
0.8
14.4
-2.4
14.7
0.8
15.2
External balance
Exports ($bn)
Imports ($bn)
Trade balance ($bn)
Trade balance (% of GDP)
Current account balance ($bn)
Current account balance (% of GDP)
Gross FDI ($bn)
Gross FDI (% of GDP)
Current account balance plus FDI (% of GDP)
Exports (% YoY, value)
Imports (% YoY, value)
Foreign exchange reserves ($bn)
Import cover (months of merchandise imports)
136
76.1
59.9
13.9
35.4
8.2
6.8
1.6
9.8
27.1
24.8
76.9
12.1
183
97.4
85.6
14.5
59.5
10.1
9.4
1.6
11.7
34.6
28.0
125
15.4
244
125
119
15.6
84.6
11.1
15.5
2.0
13.1
33.3
28.3
182
17.5
304
164
140
14.1
94.7
9.6
37.6
3.8
13.4
24.6
31.2
304
22.2
354
223
131
10.1
77.8
6.0
55.9
4.3
10.3
16.4
36.0
479
25.8
472
292
180
10.9
103.5
6.2
74.8
4.5
10.8
33.3
30.9
427
17.5
303
192
111
9.1
48.6
4.0
36.6
3.0
7.0
-35.8
-34.2
439
27.4
401
249
152
10.0
70.3
4.6
43.1
2.8
7.4
32.3
29.7
479
23.1
522
324
198
10.4
98.8
5.2
55.1
2.9
8.1
30.2
30.1
499
18.5
528
336
192
9.6
71.4
3.6
50.6
2.5
6.1
1.1
3.6
538
19.2
523
341
182
8.8
34.1
1.6
79.3
3.8
5.5
-0.9
1.7
430
15.1
494
308
186
10.0
59.5
3.2
18.6
1.0
4.2
-5.7
-9.8
385
15.0
385
220
165
12.4
69.5
5.2
12.0
0.9
6.1
-22.0
-28.6
343
18.7
458
262
196
12.2
93.1
5.8
25.0
1.6
7.3
19.0
19.1
375
17.2
Debt indicators
Gross external debt year-end ($bn)
Gross external debt (% of GDP)
Gross external debt (% of exports)
Total debt service ($bn)
Total debt service (% of GDP)
Total debt service (% of exports)
186
43
137
28
7
21
213
36
116
44
7
24
257
34
105
59
8
24
313
32
103
85
9
28
464
36
131
107
8
30
481
29
102
148
9
31
467
38
154
87
7
29
483
32
121
100
7
25
545
29
104
109
6
21
636
32
111
128
6
24
729
35
139
143
7
27
594
32
120
130
7
26
507
38
134
101
8
27
476
29
105
91
6
20
Interest & exchange rates
Broad money supply (% YoY)
Refinancing rate year-end (%)
REPO rate year-end (%)
Deposit rate year-end (%)
3-month interest rate (MosPrime avg %)
3-month rates minus $-LIBOR
Exchange rate (RUB/$) year-end
Exchange rate (RUB/$) annual average
Exchange rate (RUB/EUR) year-end
Exchange rate (RUB/EUR) annual average
50.4
16.0
6.5
0.5
7.8
6.6
29.5
30.7
36.8
34.7
35.8
13.0
6.5
0.5
7.2
5.6
27.7
28.8
37.6
35.8
38.5
12.0
6.5
0.5
4.9
1.3
28.8
28.3
34.1
35.2
48.7
11.0
6.5
2.3
5.1
-0.1
26.3
27.2
34.7
34.1
43.5
10.0
6.5
2.8
5.9
0.6
24.5
25.6
35.9
35.0
0.8
13.0
9.5
7.25
9.8
6.8
29.4
24.9
42.7
36.5
17.7
8.75
6.0
4.0
13.7
13.0
30.2
31.7
43.3
44.1
31.1
7.75
5.0
3.0
4.3
4.0
30.5
30.4
40.8
40.3
22.3
8.00
5.25
4.00
5.1
4.8
32.1
29.4
41.7
40.9
11.9
8.25
5.50
4.25
7.1
6.7
30.5
31.0
40.3
39.9
15.1
8.25
5.50
4.50
7.00
6.8
32.7
31.9
44.9
42.4
4.5
8.25
17.0
16.0
10.5
10.3
56.2
38.6
68.4
50.9
1.2
10.0
10.0
9.0
14.0
13.5
55.0
57.5
57.8
62.1
7.2
6.5
6.5
5.5
9.5
8.0
51.0
52.9
56.1
56.9
37.6
40.8
42.4
40.2
42.9
46.4
50.5
52.9
49.8
47.4
10,458 12,211 14,897 18,586 22,675 25,754 30,286 35,860 36,757 39,329
119.6 138.1 110.5 100.2 105.6 111.3 111.3 105.3 103.2 105.1
Source: Rosstat, CBR, MinFin, Bloomberg, IMF, World Bank, Renaissance Capital estimates
12
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