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May: struggling for growth


FY13 2.4% GDP annual growth now looks upbeat. We see downside risks to our base case forecast on the back of the weak economic performance in 1Q13 and delays in developing infrastructure projects under the ‘infrastructure bonds’ framework. Further downside risks to growth could arise if monetary stimuli are delayed and the oil price remains under pressure.

April pick-up in CPI on veg. prices short-lived. This year, vegetable prices started rising earlier than the previous year, adding upward pressure to CPI in April (rose to 7.2% YoY), but the base effect is set to be favourable in May, implying stronger disinflation in the coming months.

RUB weakened in April on lower oil prices; bleak prospects. Last month, RUBBASKET was anchoring somewhere near 35.50 and occasionally crossed the upper boundary of the no-interventions sub-band, forcing the CBR to intervene. We expect further RUB weakness into 2H13: all eyes are on oil prices and current account seasonality.

Month ahead. Two key events in May are set to define the outlook for 2H13: the possible start of 1-day repo rate cuts and the announcement of changes to the economic policy. On the economy data front, April is due to show rather solid results on the back of colder weather and an additional working day (to be followed by a weak May owing to the long public holidays), while CPI will likely return to a downward trend. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

GDP, CPI, inflation, ruble, CBR

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