Global growth momentum continued in the first quarter of 2017, with global industrial production and goods trade growth rebounding from a pronounced weakness in the first half of 2016.
Financial markets and capital flows to emerging market and developing economies (EMDEs) have remained buoyant despite policy uncertainty and heightened geopolitical risks.
Oil prices gained ground thanks to the prospects that the OPEC/non-OPEC cuts will be extended in the scheduled OPEC meet on May 25th.
In April, higher oil prices and continued capital flows to EMDEs resulted in the ruble appreciating for the fifth consecutive month.
The Russian economy gained momentum in March, but the manufacturing PMI for April was surprisingly low. Inflation slowed further in April, almost reaching the end year target of 4 percent.
Noting this, as well as decelerating inflation expectations, the Bank of Russia cut the key rate by 0.5 p.p. to 9.25 percent.
Key credit risk and performance indicators in the banking sector have been showing positive dynamics as the Russian economy gradually improves.
In the first three months of 2017, the federal government balance strengthened on the back of increasingly robust oil revenues; however, increased spending marginally widened the non-oil primary balance.
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