Page 7 - Buy Russia - bne IntelliNews monthly magazine April 2017

bne April 2017 The Month That Was I 7
Economics
Central Europe
Lithuania was the fastest growing Baltic state last year. GDP growth
was revised 0.1pp higher to 2.3%. The Latvian economy grew 2.0% last year (revised up from 1.6%), while Estonian GDP expanded 1.6%.
Polish unemployment fell 1.7pp y/y to 8.5% in February, the lowest figure for more than 20 years. In monthly terms the joblessness rate decreased by 0.1pp.
Hungary finally joined the negative yield club on March 21 as Government Debt Management Agency AKK accepted a bid of -0.01% at an auction of three- month T-bills. Enjoying a much better rating, peers Slovakia and the Czech Republic have been enjoying negative yields for more than a year.
Hungary’s economy grew 2% in 2016,
a second estimate released by statis- tics office KSH confirmed. The result represents the slowest rate of expansion among the Visegrad countries.
Weak investment was confirmed as the main culprit behind disappoint- ing Czech GDP growth of 2.3% in 2016. Despite a rise of 0.2pp to 1.9% q/q growth for the final three months of the year, the full-year performance remained below expectations.
Czech inflation accelerated by 0.3pp to 2.5% y/y in February, data released by the statistics office showed.The read- ing was just above expectations, and will increase the odds that the Czech National Bank will lift its cap on the koruna early in the second quarter
of the year.
Southeast Europe
Russia will repay $125.2mn of Soviet debt to Bosnia & Herzegovina under an agreement signed between the governors of the central banks of Bosnia and Russia. The governments of Bosnia’s
two entities are relying on this money to cover their budget spending this year.
Turkey’s industrial output expanded for the fourth straight month in Janu- ary, data from national statistics office TUIK showed. The calendar-adjusted industrial production index increased by 2.6% y/y in January, slightly ahead of the market consensus forecast for a 2.3% gain.
GDP growth in Croatia accelerated
to 2.9% y/y in 2016 from 1.6% in 2015 thanks to the private consumption growth, recovery in foreign demand and favourable tourism season, the statistics office said. The performance was above forecasts from the central bank and international financial institutions.
Russia and Turkey will create a joint investment fund to which each country will commit $500mn. The Russian Direct Investment Fund (RDIF) and Turkiye Wealth Fund (TWF) inked the agreement in the presence of Russian President Vladimir Putin and Turkish President Tayyip Erdogan, who was on a visit to Moscow.
Ukraine almost doubled to $600mn compared with the same period in 2015. Around 70% of total revenues came from Russia ($1.667bn).
After posting record-high numbers
in December and January, Russia's Manufacturing Purchasing Manag- ers Index (PMI) slipped in February. Growth in both output and new orders moderated in February, and although the expansion remained solid, this puts into question the strong start of 2017 for Russian industry. The PMI in the report- ing month declined from January's near six-year high of 54.7 to 52.5, lowest in the four months, but still above the 50.0 no-change mark.
The regional Chinese authorities
are planning to allocate CNY101bn ($15bn) in 2017 for the construction of roads in Russia. In 2017 alone, about 20,000km of highways are planned to be built, out of which 3,000km are high- speed highways.
The National Bank of Belarus reduced its benchmark interest rate by 1 per- centage point to 15% on March 15.
Eurasia
The International Monetary Fund and the Georgian government have agreed a three-year, $285mn extended fund facility.
Uzbek migrants working in Russia sent home $1.88bn in 2016, 20.3% less than in 2015. Russia’s economic slowdown and the resulting deprecia- tion of the ruble depressed the dollar value of the money migrants sent home. Remittances plunged 57.5% y/y in 2015.
Kyrgyzstan’s economic growth reached 5.4% y/y in the first two months of 2017, against the 9.5% y/y economic decline recorded in the same period of 2016, according to the latest data released by the National Statistical Committee.
Eastern Europe
Policymakers for the Central Bank of Russia at its board meeting on March 24 opted to reduce their main rate
by 0.25pp to 9.75% – defying market expectations of no change this month.
Foreign direct investment (FDI) in Ukraine increased by 17.1% year-on- year to $4.406bn in 2016. In the fourth quarter of 2016, the volume of FDI in
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