(02 FEBRUARY 2018)DAILY MARKET BRIEF 2:Russian economy’s first growth since 2014

Russia’s economy is finally back on its feet. Having endured three years of economic downturn, Russia’s Federal Statistics Service finally published 2017 Real GDP Y/Y at 1.50% that remain below expectations (consensus: 1.70%), two months before presidential. Following the announcement USD/RUB decreased by -0.54% and Russian 2 years and 10 years treasuries decreased by -0.39% and -0.77%. The end of the year appeared to be less fruitful with a clear shortfall in industrial production (November and December industrial production at -3.60% and -1.50% respectively) and a clear decrease in Russian’s purchasing power for four years in a row (2017 inflation: 2.50%).

2015 and 2016 were difficult times for Russia who suffered from Crimea annexation in March 2014 and 2015 recession, essentially caused by the fall in energy prices and continuous trade tensions with EU and US economies.

Russian economy is recovering from recession and should, again, present clear signs of improvement in 2018, strongly supported by factors that have remained weak during previous periods and namely the energy sector that endured strong price and production decrease as well as weakened manufacturing sector that is now providing signs of resumption (December Markit Manufacturing PMI at 52.1).

By Vincent Mivelaz