EMEA Outlook: Elections Set the Scene in Q2

March 25, 2024 2:00 PM UTC

·     Unlike South Africa and Russia, Turkiye continued with tightening monetary policy in Q1 due to stubborn inflation, pressure on FX and reserves. Meanwhile, Russia and South Africa halted their tightening cycles as of 2024 and will likely start cutting interest rates in Q3 depending on how

CBR Keeps the Key Rate Constant at 16%

March 22, 2024 10:55 AM UTC

Bottom Line: As we envisaged, Central Bank of Russia (CBR) announced on March 22 that it decided to keep the policy rate unchanged at 16% for the second meeting in a row, despite inflationary pressures remaining elevated, and currency weakening continued. We expect the CBR to hold the key rate stab

As Expected, CBR Keeps the Key Rate at 16%

February 16, 2024 1:49 PM UTC

Bottom Line: As we predicted, Central Bank of Russia (CBR) announced on February 16 that it decided to keep the policy rate unchanged at 16% after lifting the rate in the last five consecutive MPC meetings, despite inflationary pressures and expectations remaining elevated, domestic demand still out

EMEA Outlook: Inflationary Pressures Remain Strong

December 18, 2023 10:01 AM UTC

Our Forecasts
Source: Continuum Economics
Risks to Our Views
Source: Continuum Economics
EMEA Dynamics:  Inflationary Concerns Remain High
EMEA economies continue to be squeezed by macroeconomic problems such as elevated inflation and financial pressures. We think country specific factors, geopolitics,

Concerned with Accelerating Inflation, CBR Lifted the Key Rate by 100bps to 16%

December 15, 2023 3:47 PM UTC

Figure 1: Policy Rate (%) and CPI (YoY, % Change), December 2021 – December 2023
Source: Datastream, Continuum Economics
In order to reduce inflation and inflation expectations, and to anchor inflation at the target level, CBR continued its tightening cycle in the fifth consecutive MPC meeting, and

Russia’s Inflation Accelerates to 7.5% in November

December 8, 2023 7:47 PM UTC

Figure 1: Inflation Rate (%, YoY), November 2022 - November 2023
Source: Datastream, Continuum Economics
According to Rosstat on December 8, prices of food, non-food products and services rose by 1.55%, 0.53% and 1.23% on a monthly basis in November, respectively. The consumer price index (CPI) edged

Russian Economy Grows by 5% in October

November 29, 2023 7:11 PM UTC

Figure 1: Industrial Production (%, YoY), October 2020 – October 2023
Source: Datastream, Continuum Economics
The Russian economy continues to grow fast in 2023 so far, after partly relieved from the negative impacts of the war in Ukraine in 2023. The Russian economy grew by a strong 5% YoY in Octob

Russian Economy Expands by 5.5% in Q3, Rosstat Reports

November 15, 2023 5:25 PM UTC

Figure 1: GDP Growth (%, YoY), Q3 2020 – Q3 2023
Source: Datastream, Continuum Economics
The Russian economy continues to grow fast in 2023 so far, after partly relieved from the negative impacts of the war in Ukraine. (Note: Russian GDP decreased by 1.8% in Q1 2023, and grew by 4.9% in Q2.) The mai

Russia’s Inflation Stays Strong in October

November 10, 2023 5:06 PM UTC

Figure 1: $/RUB Rate, November 2021 - November 2023
Source: Datastream, Continuum Economics
According to Rosstat, prices of food, non-food products and services rose by 1.35%, 0.55% and 0.48% on a monthly basis in October, respectively. The consumer price index (CPI) also rose by 0.83% on a monthly b

Russia: War Related Sanctions and Shrinking Labor Force Pose Threats to Long Term Growth

November 9, 2023 12:02 PM UTC

Figure 1: Russia GDP Growth Forecasts to 2030 (%) 
Source: Continuum Economics/Datastream
Figure 2: Russia Population Forecasts to 2030 (Thousand)
Source: Continuum Economics/Datastream
Figure 3: Russia Industrial Production Forecast to 2030 
Source: Continuum Economics/Datastream
Technology is also o

Russia’s GDP Grew Faster Than Expected in January - September 2023

November 1, 2023 2:23 PM UTC

Figure 1: Industrial Production (%, YoY), October 2018 – September 2023
Source: Datastream, Continuum Economics
The main accelerator for Russian growth continues to be the surge in the military spending after the war in Ukraine started. Despite there being a pause on territorial advance by Russia o

Russia’s Inflation Surged Fast in September

October 12, 2023 6:05 PM UTC

Figure 1: CPI Inflation Rate (%, YoY), September 2022- September 2023
Source: Datastream, Continuum Economics
According to Rosstat, prices of food, non-food products and services rose by 0.86%, 1.09% and 0.61% on a monthly basis in September, respectively. The consumer price index (CPI) also hiked by

Russia’s Inflation is Expected to Continue to Surge in September

October 3, 2023 7:50 AM UTC

Figure 1: $ to Ruble Rate, September 2022- September 2023
Source: Datastream, Continuum Economics
After food prices rose by 3.6% in annual terms, the cost of services surged by 9.5% in annual terms and yearly diesel fuel prices hiked by 4.1% in August, we expect rising patterns to continue in Septembe

EMEA Outlook: Domestic Factors and Geopolitics Dominate Heading to 2024 Election Year

September 28, 2023 7:45 AM UTC

EMEA Dynamics: Domestic Factors and Geopolitics Continue to Dominate the Outlook during 2024 Election Year
EMEA economies continue to be squeezed by the elevated DM interest rates, high oil and certain food prices, EU and China slowdown. However, country specific factors and geopolitics will continue

Russian GDP Grew by 2.1% in January-July 2023

September 27, 2023 3:54 PM UTC

Figure 1: Central Government Deficit/Surplus (in Trillion Rubles), September 2020 - August 2023
Source: Datastream, Continuum Economics
The predictions for Russian GDP remain positive, despite the ongoing Ukraine war and macroeconomic problems. Underlining strong manufacturing figures, economic devel

CBR Maintains Hawkish Stance by Lifting the Rate to 13%

September 15, 2023 2:13 PM UTC

Figure 1: $/Ruble, September 2020 - September 2023
Source: Datastream
Despite general consensus among economists forecasting no change in the key rate on September 15, CBR surprised the analysts. (Note: Our prediction was a hike by 50 bps to 12.5%). As specified by the Monetary Policy press release by

Inflation Alarming: Russia’s Inflation Surged to 5.2% in August

September 11, 2023 8:10 AM UTC

Figure 1: CPI (%, YoY), January 2021 - August 2023
Source: Datastream, Continuum Economics
According to Rosstat, food prices rose by 3.58% in annual terms, while prices of non-food products soared by 1.14% on a monthly basis and by 3.5% compared to August 2022. The cost of services surged by 9.54% in

Russian GDP Grew by 1.6% in 1H 2023

September 1, 2023 10:03 AM UTC

Figure 1: GDP (%, YoY), Q3 2018 – Q2 2023
Source: Datastream, Continuum Economics
The predictions for Russian GDP remain positive despite the ongoing Ukraine war. Russian Finance Minister Anton Siluanov said on August 26 that Russia's economy is expected to grow by 2.5% or more in 2023. Central Ban

CBR Hikes Key Rate to 12% at Emergency Bank Meeting

August 15, 2023 3:08 PM UTC

Figure 1: CPI (%, YoY), January 2021 - July 2023
Source: CBR, Rosstat
As high domestic demand and lending, strong military spending (which is estimated to be more than $100bn in 2023, a third of all public expenditure)in addition to aggravation of staff shortages fanned inflation this year, CBR’s de

Russian GDP Booms in Q2 2023, Future Remains Questionable under Rate Hikes

August 14, 2023 2:00 PM UTC

Figure 1: GDP (% YoY), Q3 2018 – Q2 2023
Source: Datastream, Continuum Economics
Supported by the recent GDP release, the predictions for Russian GDP remain positive. In its report on the outlook for the world economy, IMF raised its forecast for Russia's GDP growth in 2023 by 0.8 percentage points

Bells are Tolling: Russia’s Inflation Continued to Surge in July

August 10, 2023 7:09 AM UTC

Figure 1: CPI and PPI (2010=100), August 2018 - July 2023
Source: Datastream, Continuum Economics
According to Rosstat, food prices in July rose by 0.49% compared to June and by 2.23% in annual terms, while prices of non-food products soared by 0.91% on a monthly basis and by 2.36% compared to June 20

CBR Going Forward: New Rate Hikes in the Horizon

August 1, 2023 3:19 PM UTC

Figure 1: Inflation, Inflation Expectations and Key Rate 
Source: CBR, Rosstat
As specified by the Monetary Policy Report published on July 31, and as CBR governor Nabiullina stated in follow-up to the recent Board of Directors meeting, CBR started monetary tightening as of July since the ruble has

Hawkish CBR Hikes the Policy Rate to 8.5% as Inflation Bites

July 21, 2023 1:15 PM UTC

We think the inflationary pressures were the main driver for the rate decision. First, as the benefits from base effects bringing inflation down has ended in April, Russian inflation continued its increasing pattern in June, picking up 3.25% when compared 2.5% the previous month. In addition, the Mi

Tough Decision Awaits CBR on July 21: Monetary Tightening to Start Soon, but Maybe Not This Time?

July 18, 2023 8:47 AM UTC

First, let’s elaborate on why Russian economy continues to struggle, particularly after May. Russian inflation entered an increasing trend as of June and reached 3.25% Yr/Yr (from 2.5% a month earlier), following a short easing cycle in March and April, as the base effects brought inflation down h

EMEA Outlook: Domestic Factors Dominant

June 21, 2023 8:03 AM UTC

EMEA Dynamics: Deteriorating Macro Picture Cannot Steal the Stage from Politics and Geopolitics
EMEA economies continue to be squeezed by elevated DM interest rates as the growth trajectories decrease for most countries for 2023. Soaring DM interest rates have different effects across the three key c

EM FX: USD Strength but Not Crisis

September 9, 2022 1:01 AM UTC

Figure 1: USD Rises More Slowly against Key EMs and Falls vs. Brazilian Real (Dec. 31, 2021 = 100)
Source: Continuum Economics
The USD surge against G10 currencies has not been replicated so far against bigger EM currencies for a number of reasons. Key points include:
Figure 2: 10yr Nominal Yield Spre

Russia Defaults on External Debt: So What?

June 30, 2022 9:30 AM UTC

Figure 1: Russia Gross External Debt — Foreign Currency Bonds, $m
Source: Bloomberg, Continuum Economics
Default was a foregone conclusion since the U.S. Treasury failed to renew the waiver for Russian debt payments on May 25, but it is now official: Russia's failure to pay interest on a pair of Eur