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bne February 2018 The Month That Was I 7
Economics
Eastern Europe
Foreign direct investment (FDI) into Russia rose in in the first half of 2017 to $17bn. The bulk of this money is actually Russian capital flight returning home via offshore havens.
Russia’s fixed investment was up 3% y/y in the third quarter, largely driven by a few state sponsored mega-proj- ects. The result was a disappointment following growth of more than 6% in the second quarter.
Russia’s defence spending will aver- age nearly RUB2.3 trillion ($39.5bn) from 2018 to 2020, a senior Finance Ministry official said.
The debt of Russian regions will to rise 7.7% to RUB2.5 trillion ($43.4bn) by the end of 2017, the Russian Minis- try of Finance said.
Russia hit its target of boosting trade turnover with China to over $80bn in 2017, the China’s General Adminis- tration of Customs said. In 2016, trade turnover between Russia and China grew by 2.2% year-on-year, to reach $69.52bn.
President Vladimir Putin announced that the minimum wage in
Russia will be equalised with the subsistence minimum six months earlier than previously planned,
as of May 2018. As of January 1, the minimum wage in the country amounts to RUB9,500 ($167) per month, while the subsistence level is considered to be RUB11,000 ($193).
Russia’s economic growth is expected to stabilise at around 1.8% in 2018- 2020 as the country has adjusted to the new level of oil prices, the World Bank said in a January report.
Russia’s rainy day Reserve Fund has ceased to exist as of January 1, the Ministry of Finance reported. Set up in 2008 in the boom years, the Reserve
Fund was a store of money designed to top up the budget.
Ukraine's parliament greenlighted on December 7 the nation's state budget for 2018 in second reading with a deficit target increased to UAH81.8bn ($3.02bn) or 2.5% of GDP from UAH77.9bn or 2.4% of GDP.
Central Europe
Polish inflation reached its highest level in five years. The consumer price index (CPI) grew 2.5% y/y in November, 0.4pp faster than the annual expan-
sion in October, statistics office GUS announced in a flash estimate.
Foreign direct investment in Poland came in at PLN54.9bn (€13bn) in 2016, which is a drop of 4.6% com- pared to 2015, when a record amount of PLN57.6bn of FDI arrived in the country.
The Polish parliament passed the state budget for 2018 that assumes a PN41.5bn (€9.96bn) deficit, a smaller deficit than planned for the previous years thanks to improved tax collection.
Hungary's cash flow-based bud- get deficit, excluding local coun- cils, increased by HUF335bn (€1.1bn) in December, bringing the full-year figure to HUF1.97 trillion, the highest since 2016.
Hungarian retail sales increased
by 6.4% y/y in November, up from 6.3% in the preceding month, beating estimates.
Southeast Europe
Serbia’s exports amounted to €13.86bn in January-November 2017, an increase of 13.1% against the same period of 2016. Belgrade is seeking to attract more export-oriented invest- ment.
Consumer prices in Bosnia & Herzegovina increased 1.2% y/y in November, cooling from a 1.4% y/y rise in October, the country’s statistics office said. In m/m terms, the CPI in November remained unchanged, after moving up 0.6% m/m in October.
Albania's central bank kept
its key interest rate unchanged at 1.25% on December 20. The rate has been kept at the same record low level since May 2016.
Remittances sent home by Albanians working abroad reached their highest level since 2014. Remittances totaled €166mn in the third quarter of 2017,
up by 3.7% y/y, the central bank said.
Eurasia
GDP growth in Kazakhstan in 2017 officially came in at 4% y/y com- pared to economic expansion of just 1% in 2016. The World Bank expects growth to moderate to 2.6% this year as the effects of the Kashagan oil field relaunch and fiscal stimuli wear off. Industrial output grew by 7% while oil output increased 10.5% in Kazakhstan last year.
Annual CPI in Uzbekistan was offi- cially posted at 14.4% for 2017. It was the first time Uzbekistan had acknowl- edged it suffers double digit inflation. Reform-minded President Shakvat Mirziyoyev has committed to reflecting economic realities more accurately.
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