Russia Monthly Economic Developments

The global economy experienced divergent growth in the second quarter of 2018 characterized by a rebounding in advanced economies, continued moderation in China, and a slowdown in commodity exporting emerging markets and developing economies (EMDEs). Despite the OPEC announcement of an increase in production, oil prices rose in June, supported by geopolitical events. In June, buoyed by relatively high oil prices and strong macroeconomic fundamentals, the ruble exchange rate with respect to the U.S. dollar performed better than other emerging market (EM) currencies. In the first six months of 2018, Russia’s current account surplus strengthened to US$53.2 billion, up from US$23.9 billion in the same period last year. Industrial production grew solidly in May, helped by robust growth in manufacturing. Labor market dynamics were also positive in May. From January – June 2018, aided by higher oil revenues and lower expenditures, the federal budget primary surplus strengthened to 2.7 percent of GDP, up from a 0.2 percent GDP primary deficit in the same period last year. The Ministry of Finance released draft guidelines for its budgetary and tax policy for 2019-21, which imply budget consolidation through revenue increases. In June, consumer price inflation dropped, while inflation expectations rose. In May, the banking sector’s statistics showed mixed trends in lending activity, with weak corporate lending growth continuing to be outpaced by retail lending.


Apurva Sanghi

Lead Economist for the Russian Federation

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