Newsflow from Russia will likely dominate the media landscape across our CEMEEA universe with president Putin’s call-in live television broadcast featuring as the top event of the week. Obviously more airtime is likely to be given to the foreign policy issues this time, but persistent stagnation of the economy makes discussion of domestic policies ever more critical. Live call-ins are rarely an appropriate venue to announce ‘big bazooka’ stimulus packages, and in any case we would rather expect reiteration that more effort is required to push through on the structural agenda (business climate, corruption, reforms in the social sector, etc.).
Meanwhile, the Russian economy is lingering on the edge of recession and, while February saw a temporary uptick in activity, we expect a pullback into the downtrend already in March, particularly in light of the uncertainty shock that put a dent in confidence early in the month. Recent surveys suggest business confidence was hit the most and we would look for the first damage assessment in fixed asset investment data. Although Russian consumers are far from being upbeat, the latest surveys did not reveal any material shock to confidence, suggesting a gentler (vs. business spending) pace of the slowdown in consumer spending in line with slowing incomes, credit and shrinking employment. Nevertheless, growth in retail sales is likely to pullback after the Olympics-related boost last month. On the supply side, we look for IP to dip back below the waterline driven both by unusually warm weather and softening domestic demand.