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Macro week ahead – MinFin presents amended budget


This week in Russia, the Ministry of Finance is to present its draft of budget amendments for 2015 in the Duma, which is then to be signed into law. Among the key macro data in Russia is the monthly CPI report for February (Thursday) as well as the set of early indicators (PMIs, rail cargo volumes, gas, oil and electricity output). On Wednesday, both the regular weekly CPI print for Russia and February CPI for Turkey are due. Additionally, PMIs for the last month of winter are published across CEMEEA, as well as GDP for 4Q14 for Hungary and Romania.

Amendments presented by MinFin in the Duma are to contain RUB 1tn of cuts, consisting of a reduction in capex and declines in previously planned public sector wage increases, which are likely to stay flat for the coming year. Another major point will be an increase of the transfer from the Reserve Fund, up to approximately RUB 3tn to help fund the current year’s outlays, as the prevailing financial market conditions remain unfavourable, with the tax income projected to decline substantially.

February’s CPI print will likely see an uptick in YoY terms to 16.6-7%, due to the exchange rate pass-through effect, while the run rate of inflation could well demonstrate a third consecutive monthly decline to 2.2%. In the coming months, the run rate of inflation is set to decrease further on the back of slowing economic activity which, by the end of the year, could well return inflation to 11.0% YoY.

In January, business sentiment in Russia (i.e. PMIs) outperformed consensus and we expect it to show only a non-material decline in February.

In Poland, the latest data suggests that economic growth has not been set back by the continued deflation, which is to keep price growth below the official 2% target, at least until the end of 2016. Any protracted undershoot of the target forms a background against which the NBP is likely to cut its rate 0.25bp on Wednesday.

Vladimir Kolychev, Alexander Isakov
VTB Capital analysts


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