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Macro week ahead – 1Q15 GDP estimates in Russia and CEE3


This week, the key news flow is the 1Q15 GDP in CEE3 and April CPI statistics in the Czech Republic and Poland. Making the news in Russia is Rosstat’s 1Q15 GDP estimate and the regular weekly CPI numbers. In addition, AEB is to present new car sales statistics and the Ministry of Finance releases its budget execution numbers for April.

In our CEE3 countries, the spillover from EU growth has likely provided a positive contribution to the growth rates, which remain closely linked to economic activity in the Euro area both through the balance of payments and expectations. However, we do not expect net exports to make a significant contribution to the headline GDP, as most of the growth was likely driven by internal consumer and investment demand. We estimate output in the Czech Republic to edge higher to 1.9% YoY, from 1.4% YoY in 4Q14, as suggested by the CNB's forecast, while in Hungary we see it staying level at +3.3% YoY, and Poland showing a rise to 3.3% YoY, from 3.1% YoY a quarter earlier. 

Inflation measures are set to go slightly higher both in Poland and the Czech Republic on moderately higher food and fuel price growth, to -1.1%YoY and 0.4% YoY, respectively.

In Russia, the Ministry for the Economy estimates that output contracted 2.2% YoY in 1Q15, while the CBR's official forecast, published in the monetary policy report back in March, puts the estimate at -1.5% YoY. Our current estimate, which takes into account the available hard data on the output of key industries as well as the structure of Russian economy, is more conservative and suggests a 2.6%YoY decline in output. The economic activity contraction is mostly demand-side driven, as suggested by the steep decline in retail turnover, with retail accounting for as much as 26.3% of the gross value added of industries tracked.

On the inflation front, we expect another sub 0.2% WoW weekly print driven by the same mix of food price growth normalisation and deepening pass-through of the stronger rouble to non-food categories helped by deficient demand in the economy. This week might bring the headline still lower to 16.2-16.3% YoY.

Vladimir Kolychev, Alexander Isakov
VTB Capital analysts

Russia, inflation

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