Page 20 - RusRPTMay20

scenario looks pretty. The softer of the two envisions quarantine measures
lasting through June and Urals oil prices at $20 per barrel through the end of
the year. Inflation would rise to 4.5% and the ruble would weaken to 80 against
the dollar. In the second scenario, quarantine lasts through September and
Urals oil costs just $10 per barrel through the third quarter. Inflation rises to
5.5% and the ruble weakens to 89. The economy ministry says that these
scenarios are not projections, but preparations for the worst case. Yet, the
assumptions outlined in the first scenario closely mirror those that economists
have been making.
Russia’s business confidence unsurprisingly took a big hit in April falling
from -2 in March to -7 in April​, according to Rosstat’s monthly survey as the
double whammy of the oil price shock and the coronavirus pandemic began to
take its toll.
The fall is unusual as business confidence in Russia tends to be very seasonal
with confidence improving in the spring and summer months to between -1 and
-2 but deteriorating as the winter sets in around September. That pattern has
held for the last three years but this year sharp fall in April is an aberration and
close to the lowest level of confidence seen in the since 2016.
The effects of the double crisis are yet to show up in the consumer confidence
survey, which is taken quarterly. The first quarter of this year showed an uptick
in consumer confidence to -11 as income levels started to rise again and a
general “feel good” factor returned. However, the second quarter is likely to
look a lot worse.
20​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com