Page 5 - bne magazine September 2020 russia melting

bne September 2020 The Month That Was I 5
Economics
Eastern Europe
Russian corporates see their biggest drop in profits in 16 years, having
lost RUB1.65 trillion ($22.3bn) in the second quarter of this year when a third of Russia’s companies remained in the red. Total profits, excluding small businesses, in March-May 2020 decreased by 67% on an annualised basis – the worst result on record. The previous low was set in 2017, when profits fell 28%.
Russia's GDP fell by 8.5% in 2Q20
due the lockdown quarantine measures imposed across the country reeling from the coronacrisis. The second quarter
of the year took the full brunt of the crisis, but the fall was not quite as in the previous 1998 and 2009 crises.
Russia’s federal budget deficit grew a whopping 85% in July compared to the previous month. In the first half of the year, Russia ran an RUB823bn deficit. In July the deficit increased by RUB699.2bn, bringing the total budget shortfall from January-July to RUB1.5 trillion rubles ($20.5bn).
The foreign currency and gold reserves of the Central Bank of Russia (CBR) tipped over the historic record-high mark of $600bn as of August 7, beating the previous record
of August 2008, when GIR stood at $598bn. Russia has gained some $40bn in 2020. Ukraine's international reserves increased by 1.0% to $28.802bn in July.
Ukraine’s real GDP dropped 6.5% y/y in 1H20, deepening from estimated 5.9% y/y decline in 5M20, according to the Ministry of Economic Development. In 2Q20, GDP collapsed 11.0% y/y, down from 1.3% y/y drop in 1Q20.
Central Europe
The European Commission (EC) proposes to support 15 member states including nine from Central and Southeast Europe with a total
of €81.4bn under the SURE instrument – part of the EU's anti-coronacrisis strategy. The amounts of soft loans
on offer include: Bulgaria (€511mn), Croatia (€1bn), Czechia (€2bn), Latvia (€192mn), Lithuania (€602mn), Poland (€11.2b), Romania (€4bn), Slovakia (€631mn) and Slovenia (€1.1bn).
Polish GDP contracts 7.9% y/y in 2Q20 in CEE’s mildest recession. The economy expanded 1.7% y/y in the first quarter, but stalled in the next quarter. However, the diversified economy proved to be more robust than many peers. Polish industry also outperformed expectations in July, picking up from a 0.5% annualised growth in June to 1.1% in July.
Hungary's GDP plummeted 13.6% y/y in the second quarter, and 14.5% from the previous quarter, the steepest decline on record as the economy came to a standstill due to the coronacrisis. According to statistics office KSH. Hungarian industrial production posted a drop of 7.8% year-on-year in June.
Hungary's state debt ballooned to 71.9% of the GDP at the end of June thanks to anti-crisis spending. State debt is on track to climb to 72.6% before falling to 66.3% next year. Hungary's constitution caps debt at 50% GDP. National debt peaked at 83.5% of GDP in 2010.
Seasonally adjusted sales of services in Czechia posted the highest recorded decrease since 2005,
down by 19.8% year-on-year in 2Q20, influenced by measures taken to prevent the coronavirus (COVID-19) outbreak,. In quarterly terms, services turnover fell by 14.4% in 2Q20.
The Czech state budget deficit saw the highest July figures in its history, rising to CZK205.1bn (€7.9bn) at the end of July, up from CZK195.2bn in June. Compared to July 2019, the deficit amounted to CZK9.7bn, according to data published by the Ministry of Finance.
Southeast Europe
Romania's public debt increased by RON57.3bn (€11.8bn) in the first half of the year, to RON430.8bn, or 40.2% of the GDP, the finance ministry said. Romania has the weakest tax collection rates and among the lowest tax rates in Europe. The debt-to-GDP ratio increased by five percentage points, from 35.2% at the end of 2019.
Bulgaria reported a 9.2% year-on- year decrease in GDP (seasonally adjusted) in 2Q20, the National Statistical Institute (NSI) said. The decrease, while steep, is considerably smaller than the 14.1% EU average, with only three countries – Lithuania (3.7%), Finland (5.2%) and Poland (7.9%) – recording smaller contractions.
Eurasia
Iran's foreign trade with the Commonwealth of Independent States (CIS) in 2019 hit $3.3bn, with a surplus of $205.2mn in favour of
the Islamic Republic, according to the Iranian customs administration. In 2019 Iran exported $1.8bn, or 4.8mn tonnes, of goods to CIS countries, with the value of exports rising by more than one $1bn dollars year on year.
Kazakhstan’s trade with Russia, Belarus, Kyrgyzstan and Armenia
– fellow members of the Eurasian Economic Union (EEU) – fell by 11% y/y to $8.740bn in January-June, according to latest data published by the country’s State Statistics Committee. Exports
fell by 20.2% y/y to $2.392bn, while imports declined by 7% to $6.348bn.
Kazakhstan’s GDP contracted 1.8% y/y in the first half of 2020, contrasting with the 4% growth recorded a year earlier. Retail sales declined by 11.7% y/y in January-July, property deals plunged by 16.9% y/y to 147,455, but industrial output rose by 1.3% y/y in the same period.
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