2013-03-13 17:41:08 - Recently published research from Business Monitor International, "Russia Business Forecast Report Q2 2013", is now available at Fast Market Research

Core Views

We expect international relations between Russia and the US to remain under pressure this year as Russian domestic concerns prevent a significant improvement in ties in 2013. President Vladimir Putin continues to face strong public opposition at home and has gained significant political capital amidst his support base for his strong stance against the West, implying to us that the Kremlin's assertive stance is likely to persist this year.

We hold to our view that Russia's economic growth will slow to 3.4% in real GDP terms in 2013 as consumer spending slows and the global oil price falls from 2012 levels. However, we hold a cautiously optimistic view towards Russia's investment outlook ahead of a number of international sporting events

and a drive to increase investment into the Far East of the country.

We forecast 25 basis points (bps) of cuts to Russia's policy rate in 2013, bringing it to 8.00% by year-end as growth slows. We expect the central bank to continue moving from an exchange rate targeting towards an inflation-targeting regime. We believe that the country's slowing growth outlook will prompt authorities to loosen monetary policy.


Full Report Details at
- www.fastmr.com/prod/552239_russia_business_forecast_report_q2_20 ..


Major Forecast Changes

There have been no major forecast changes since our last quarterly report.

Key Risks To Outlook

Russia's economic outlook has become more uncertain on account of the ongoing crisis in its main export market, Europe. An escalation of the situation in the eurozone cannot be ruled out, and risk of a eurozone exit by a larger member, such as Italy or Spain, as well as a major shake-up to banking sector stability, would have serious repercussions for Russia. Not only would this see liquidity tighten domestically, but exports would end up getting hit more than our forecasts currently imply.

The hard landing scenario we are calling for in China is another risk factor to our growth outlook for Russia. A sharp drop in demand and a concomitant decline in global commodity prices would force a more abrupt rebalancing of the Russian economy towards the non-energy sector, which could foster several years of very weak economic growth.

Partial Table of Contents:

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Relations With US Unlikely To Substantially Improve In 2013
- We expect international relations between Russia and the US to remain under pressure in 2013 as Russian domestic concerns prevent a significant improvement in ties. President Vladimir Putin continues to face strong public opposition at home and has gained significant political capital amidst his support base for his strong stance against the West, implying that the Kremlin's assertive stance is likely to persist.
TABLE: POLITICS OVERVIEW
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Weaker Consumer Spending To Weigh On Growth
- We hold to our view that Russia's economic growth will slow to 3.4% in real GDP terms in 2013 as consumer spending slows and the global oil price falls from 2012 levels. However, we hold a cautiously optimistic view towards Russia's investment outlook ahead of a number of international sporting events and a drive to increase investment into the Far East of the country.
TABLE: ECONOMIC ACTIVITY
Balance Of Payments
Strong But Falling Current Account Surplus
- We forecast Russia's current account surplus to fall to 3.9% of GDP in 2013, from an estimated 4.6% in 2012. Strong services imports will keep the services account in deficit over the course of our forecast period. That said, recovering growth in major export destinations and relatively high oil and gas prices this year will counteract the services account deficit to keep the current account balance in surplus.
TABLE: CURRENT ACCOUNT
Monetary Policy
Policy Easing In Q213
- We forecast 25bps of cuts to Russia's policy rate this year bringing it to 8.00% by year-end as growth slows. We expect the central bank to continue moving from an exchange rate targeting towards an inflation-targeting regime. We believe that the country's slowing growth outlook will prompt authorities to loosen monetary policy.
TABLE: MONETARY POLICY
Fiscal Policy
Questioning Long-Term Fiscal Health
- While the Russian fiscal deficit will remain at about the same level in 2013 as in 2012 (we forecast 0.6% of GDP for 2013), we reiterate our broadly downbeat view on the country's longer-term sustainability of fiscal accounts. The government has started taking steps to reduce dependence on hydrocarbon revenues; however, we view this as only a first step and more needs to be done. Moreover, the government's pension reform indicates to us that short-term goals are superseding concerns over longer-term sustainability.
TABLE: FISCAL POLICY
Regional Outlook
Key Themes For 2013: Emerging Europe
Chapter 3: 10-Year Forecast
The Russian Economy To 2022
Trend Growth To Settle Lower As Drivers Shift To Domestic Demand
-

Full Table of Contents is available at:
-- www.fastmr.com/catalog/product.aspx?productid=552239&dt=t

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.