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Eastern Europe
July 19, 2019 www.intellinews.com I Page 16
Russian businesses lose faith in economic growth
The share of Russian businesses expecting economic recovery next year declined from 25% in February to 15% in June, according to data by IHS Markit. This makes the worst reading since February 2016, when business confidence was below the global average of 18%.
As reported by bne IntelliNews, consumer confidence in Russia remains on the ropes, but business turned in another cautiously optimistic month at 2% for the fourth month in a row in April.
However, in the manufacturing sector in June the number of producers expecting economic growth
also declined to 15%, the lowest since 2008, which coincided with three-year low composite PMI index of 49.2 (service and manufacturing) compiled by IHS.
Recent surveys performed by other pollsters have also found that Russian businesses see their environment as unfavorable and expect
it to deteriorate, according to Vedomosti daily. VTSIOM found that 71% of businesses saw the environment as unfavorable and were expecting it to worsen in the next five years. Foremost concerns are low final demand and economic uncertainty curbing investment.
Gazprom lowers prices to hold on to European buyers
Russian gas giant Gazprom has increased sales through its Electronic Trading Platform (ETP),
at which the gas trades on spot prices that are generally lower than the long-term contract prices, Vedomosti daily reported on July 11 citing analysis from the Oxford Institute for Energy Studies.
Reportedly, Gazprom’s daily ETP sales reached 0.4bn cubic metres (bcm) at the beginning of July, totalling 1.69bcm in the first eight trading days of July. This accounted for 30% of all ETP sales this year.
"More sales via ETP reflects an attempt to maintain sales volumes as customers gradually shift to the spot market," BCS Global Markets commented on July 12. The prices on ETP are 20-
25% below the current contract price, so average prices will decline further in 3Q19, the analysts warned, seeing the news as negative for Gazprom.
Sales were mainly targeted at Northern Europe, where the share of spot-linked contract pricing
is traditionally high, Vedomosti said. In the meantime, in a separate report the Central Bank of Russia (CBR) reported gas exports from Russia fell 38% quarter-on-quarter to $11bn in 2Q19.
Despite declining exports, this month capitalisation of Gazprom on the Moscow Exchange topped RUB6 trillion ($95bn) on July 4, reaching its highest since August 2008 and extending its lead as Russia’s most valuable company over rival state-owned Sberbank.