Report2 December 2018Updated one month ago

Russia in 2019: Risk-averse mode

All our key messages and forecasts for Russia for the year ahead 

Executive summary
  • GDP growth at a modest 1.0% due to weakening household consumption as a result of higher VAT rate and declining confidence in sustainable income growth
  • Corporate activity limited around state-sponsored projects, local corporate loan growth not broad-based, mostly reflects infrastructure projects and substitution of foreign debt
  • Rouble to remain stable on balanced current and capital accounts unless portfolio flows deteriorate. Sanctions against new state debt not priced in, remain a downside risk
  • Key rate unlikely to go lower on mounting CPI risks (VAT hike, gasoline prices) and external uncertainties (US-China, US-Russia)
  • Budget policy likely to be eased on expenditure in response to weaker GDP, declining popular support; and on revenues (oil tax manoeuvre/excise) in response to gasoline price risks
  • Banking sector: more interconnected with CBR and the Ministry of Finance. Interbank interest rates depend on budget rule-related FX purchases and key rate expectations.

Russia Rouble