The Russian Federal Customs Service has reported that the growth in non-CIS imports rebounded to 2.7% YoY in June, from a drop of 6.4% YoY in May, a 41-month low. The YTD growth of the indicator has kept moderating and decelerated to 4.1% YoY in 1H13.
The growth in non-volatile components revived in June, after the steep decline a month ago, but only to a mere 0.1% YoY, while the annual increase in volatile items (ships, planes, etc.) jumped to 30.4% YoY, from a modest 4.7% YoY in May.
The decline in car imports stayed in the double-digit area, at 11.2% YoY (vs. 13.4% YoY in the previous month).
Despite the statistics on non-CIS imports implying a broad-based YoY rebound from the depths in May, the scale of this rebound was only modest with volatile components (particularly, ships) being the key driver. This ‘hither and thither’ move in May-June partly stemmed from a sharp deterioration in the calendar factor in May (the extended holidays this year) and its improvement in June. Among nonvolatile components, the 13% YoY increase in chemicals imports was the major supportive factor for the headline, while contracting car import volumes put a drag on total non-CIS import growth. The bounce in imports growth in June implies that the trade surplus last month narrowed, normalising after a spike in May.
It is also important that although the growth in both investment and consumer imports returned to the black last month, the YTD growth in investment imports decreased to a post-crisis low (3.6% YoY) and in consumer imports to the lowest level this year (5.5% YoY). All in all, the numbers imply that demand (consumer and investment) in Russia continued losing momentum. As we do not expect any strong rebound in internal demand soon (we expect the first visible effect from monetary easing only in 4Q13), weak imports together with the recent rebound in oil prices are to help Russia’s current account not go deep into the red in July-August, thus limiting the negative impact on RUB.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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