Page 71 - RusRPTJul22

The decline in lending activity continued, especially in the consumer sector (-1.8% versus March).
Budget expenditures in January-April increased by almost 15%, or 2 trillion rubles, but they were offset by almost doubling oil and gas revenues (+90.6%, or 2.3 trillion rubles). The surplus of the budget system reached RUB2.8 trillion compared to RUB733bn a year ago.
In April, Urals oil cost an average of $71, which is lower than in March ($91.3) and the average for the first quarter ($90.5).
The statistics of the Ministry of Economic Development reflect the current symptoms of the Russian economy: a surplus in the balance of payments due to a reduction in imports and restrictions on the movement of capital, against industry shocks and a faster reduction in demand.
“In fact, now the crisis is that there are drawdowns in exports and imports,” Raiffeisenbank macro analyst Stanislav Murashov told The Bell. “The former is smoothed out by high prices, while the latter, apparently, have not yet appeared, and therefore stocks still play a deterrent role – which is why, apparently, industrial production has slightly fallen.”
The big decline in retail is the result of both a correction after the rush in March, a decline in real incomes, which were affected by rising prices, and rising uncertainty, said Sofya Donets, chief economist at Renaissance Capital for Russia and the CIS. “Many sectors, especially mining, have not yet been fully affected by the crisis, although we will expect a more difficult situation in the second half of the year due to the embargo on energy exports to the EU announced this week,” she said.
“In May, we see by leading indicators that, in principle, the situation is somewhat improving relative to April,” the economist argues. — It may turn out that April was a locally worst point in terms of economic activity. Although the continuing high level of uncertainty and the generally specific nature of the current shock does not rule out a second bottom. However, there are still more chances for positive surprises relative to our forecast (an 8% decline at the end of the year).
The effects of the Russian offensive war are beginning to be felt more widely in the Russian economy in April, although developments vary by industry. According to a forecast by the Russian Ministry of Economy, Russia's GDP contracted by 3% year on year in April.
The war has cut consumption in particular as the purchasing power of the Russians has weakened as prices have risen sharply. The volume of retail sales decreased by 10% year-on-year in April. Sales of new cars have
71 RUSSIA Country Report October 2020 www.intellinews.com