The external context remains supportive to Russia.
In the second quarter of 2017, global GDP reached 3.6 percent (q/q saar), its highest reading since the end of 2010, owing to a broad-based accelearation.
The Brent oil price, the main international marker, reached $59/bbl in late-September (up from a low of $44/bbl in late June) before settling back into the low $50s in October.
In September, the ruble appreciated by 3.2 percent with respect to the U.S. dollar, supported by stronger oil prices and continued investor interest in Emerging Market and Developing Economies (EMDEs).
Economic activity in Russia gained momentum in August, with output in five basic sectors growing by 2.8 percent, y/y, and industrial production expanding by 1.5 percent, y/y. Labor market indicators also improved.
The 12-month Consumer Price Index registered another record low in September, increasing the probability of a further key rate cut during the Central Bank meeting on October 27th
In the January - August 2017 period, aided by higher revenues and lower expenditures, the federal budget registered a primary balance surplus of 0.1 percent of GDP compared to a deficit of 1.9 percent of GDP in the same period last year.
The government recently submitted a draft law on the federal budget for 2018 – 2020 to the Duma.
Expenditure consolidation will bring the primary balance to 0.5 percent of GDP in 2018, down from 1.5 percent of GDP in 2017, and it will keep it at zero beginning in 2019.
The banking sector’s overall performance is improving, but remains volatile. In September, the Central Bank announced a bailout of another large private bank, B&N Bank, following the bailout of the second largest private and systemically important bank Otkritie, in August.
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