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March: preparing stage for start of easing cycle


GDP growth slows to post-crisis low in early 2013. In January, economic growth moderated to 1.6% YoY, in line with other statistics that imply a weak economy and the call for stimulus.

Possible turnaround of labour market. The SA unemployment rate finally ended its puzzling downward trend in January, rising to 5.4%. This leaves currently increasing headline CPI, which we expect to reverse in March, as the last barrier in the way of a more dovish CBR.

Month ahead. The key story in March, in our view, will be the naming of the next CBR chairman and his or her first statements on future policies. Meanwhile, February's economic data is likely to be especially downbeat, given the leap-year effect. We expect CPI to start slowing (and so believe that the weekly CPI data is worth careful watching).

Technical revision of forecasts due to increased Brent estimates. Under our base case scenario, Urals will average USD 104/bbl, declining to USD 99/bbl by the end of the year. That implies FY13 GDP adding 2.4% YoY, CPI slowing to 5.4% YoY (eop), the federal budget reaching a modest deficit of 0.5% of GDP and USDRUB weakening more modestly to 31.51 (on average) and 33.26 (eop). 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

GDP, CBR, CPI, dollar

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