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Russia Monthly Economic Developments

The COVID-19 pandemic is severely affecting global economic activity as countries race to stem the spread of the virus. A sharp rise in risk aversion has led to the EMDEs witnessing record portfolio outflows since the beginning of the year compared to any recent episode of sudden stops of capital flows. Brent crude oil prices fell to a multi-decade low of US$20/bbl, 70 percent below their January peak. The WTI Cushing contract for delivery in May fell to -US$37/bbl. On April 12, OPEC+ reached a new production agreement, and agreed to cuts of 9.7mb/d in May and June 2020, dropping to 7.7mb/d for 2020H2, and 5.8mb/d from January 2021 to April 2022. The Russian ruble weakened on the back of lower oil prices and slowing activity due to lockdown measures, reaching an average of 73.7 RUB/USD in March (compared to an average of 63.9 RUB/USD in February). Amidst a weaker ruble, annual consumer price inflation accelerated to 2.5 percent, up from 2.3 percent in February. In annual terms, in February 2020, industrial production growth accelerated to 3.3 percent, y/y, compared to 1.1 percent, y/y, in January, partly reflection a leap year factor. Labor market dynamics were positive in February 2020. In the first three months of 2020, the federal budget surplus dropped to 0.05 percent of GDP (cash basis) from 2.2 percent of GDP in the same period last year. On April 10, the CBR sold its controlling stake in Sberbank to the government (Ministry of Finance). To counter the socio-economic effects of the COVID-19 pandemic, preserve financial stability, and provide support to the real economy, the Russian Government and the Central Bank (CBR) have announced a range of policy response measures. 


Apurva Sanghi

Lead Economist for the Russian Federation

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