Page 44 - RusRPTJun20

Vladimir Putin has more than halved over the last three years from 59% in November 2017 to 25% in May, according to independent pollster the Levada Center, and slid several percentage points in just the last few months as the coronacrisis reached peak.
Putin’s personal approval rate has also taken a hit, but remains a relatively high 63% in March, on a par with his approval rating in 2013 when Russia’s economic growth fell to zero, marking the start of the subsequent years of stagnation. Putin’s popularity soared into the 80s in 2014 on the back of a surge in nationalistic pride that followed the annexation of the Crimea peninsula. Analysts say that the president’s popularity is falling now as he has broken the unspoken social contract with the Russian people.
The one blessing of the current crisis is that the collapse in demand has held down inflation​ that should have followed through from the c.20% devaluation of the ruble, which followed oil prices down following the collapse of the​ ​OPEC+ production cut deal on March 6​.​ Rates of inflation eased from April's recent peaks but remained solid amid a sharp rise in input costs and posted 3.1% in April, according to Rosstat, up slightly from 2.5% the month before.
The Central Bank of Russia (CBR) has already aggressively cut interest rates by 50bp in April to boost growth and the relatively modest inflation in May – there was zero inflation in the first two weeks of May and 0.1% in the third week – paves the way for more aggressive growth-boosting cuts by the central bank in June.
Unsurprisingly the May data signalled one of the most severe contractions in new business​ since December 2008, as global lockdowns and temporary customer closures led to subdued demand. Total sales were also impacted by less frequent, smaller orders, Markit reports.
External demand also suffered from the escalation of the virus response, with new export orders falling significantly. With the exception of April's recent low, the drop in foreign demand outpaced any seen since the depths of the global financial crisis.
While economists say they are expecting a rebound in the second half of this year, while there may be an improvement manufacturers are expecting production to fall in the coming 12 months and the inevitable recovery to be long and slow.
Inflation may be low, but the damage done to supply chains has sent input costs up​ steeply in May as suppliers increased their charges and ruble weakness drove import prices up, reports Markit. Although slower than April's recent peak, the rate of input price inflation was among the fastest since the VAT hike in early-2019. In an effort to partially pass on higher costs to clients, firms raised factory gate charges at a solid pace.
Sian Jones, Economist at IHS Markit, which compiles the Russia Manufacturing PMI survey, commented: "May data indicated a slightly softer, albeit still severe contraction in Russian manufacturing production. Declines in domestic and foreign demand weighed on output, as the impact of the COVID-19 outbreak and emergency measures were felt yet again by goods producers.
44​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com