Russian GDP Growth of 2.7% in 2021 Suggested by Conservative Outlook, Says the Economic Development Ministry

The conservative scenario of Russia’s macroeconomic outlook suggests GDP growth of 2.7% in 2021, and 2.9% in 2022, with further stabilization at the level around 2.5% amid persisting lower business activity in a number of sectors, according to the country’s social and economic development outlook for 2021 and the planned period of 2022 and 2023 presented by the Economic Development Ministry.

According to the base case scenario of the outlook, Russia’s GDP will contract by 3.9% in 2020, and grow by 3.3% in 2021, 3.4% in 2022, and by 3% in 2023.

“From the viewpoint of domestic conditions, the conservative scenario suggests lower business activity persisting long in the sectors, whose activities were restricted in response to the novel coronavirus infection spread. Meanwhile structural changes in consumer demand, both global and inside Russia, will slow down the recovery of such sectors as entertainment and leisure, tourism, personalized consumer services,” according to the outlook.

The conservative scenario “is based on the assumption that the sanitary and epidemiological situation in the world will become less favorable, a protracted recovery of the global economy and structural slowdown of its growth rates in the mid-term due to the aftermath of the novel coronavirus infection spread.” The base case option depicts the most probable scenario of Russia’s economic development considering the expected external environment and the economic policy measures being taken.

“In the conservative option of the outlook the global economic recession triggered by restrictions imposed in the biggest countries will deepen the structural problems accumulated before the pandemic,” the ministry emphasized.

Among them are a high debt burden in developed states and a number of emerging economies, a slowdown of global trade growth due to mounting trade frictions between the largest countries, slow growth of labor efficiency, an increase of global inequality. “Amid this environment global economy will be recovering slower than suggested by the base case scenario,” the outlook said.

The conservative option of the macroeconomic outlook also suggests oil prices in the range of $43-45 per barrel in the mid-term amid weak energy demand.

“Weak demand for energy resources will put additional pressure on global crude oil prices. That said, the OPEC+ agreement will continue influencing the oil market, the same as output reduction in the US and the countries with high production costs. In those conditions, oil prices are projected in the range of $43-45 per barrel in the mid-term in the conservative scenario, which is lower than base-case parameters,” the ministry explained.

Moreover, the accumulated corporate losses in the conservative scenario will restrain the recovery of profits and, as a result, of investment activity. “Amid this environment growth rates of fixed investment are projected at the level of 3.7% in 2021 and around 4.5% in the mid-term,” according to the outlook.

“Considering more moderate, than in the base case scenario, economic growth rates, growth rates of real disposable income of households in the conservative option are expected in the range of 1.6-1.9% in the mid-term, which will have a restraining effect on consumer demand,” Russia’s Economic Development Ministry said.

It estimates the growth of retail trade and charged services to consumers in 2021 in the conservative scenario at 4.5% and 5.6%, respectively, whereas in 2022-2023 both will continue growth by 2-2.3%.

China Becomes Russia’s Biggest Fresh Produce Market

Data from the Agricultural Export Center of the Russian Ministry of Agriculture show that as of September 20, Russia exported 2.67 billion US dollars worth of produce to China, experiencing an increase of 27% over the same period last year. China is the largest buyer of Russian produce, accounting for 14% of total agricultural exports from Russia.

At the same time, China is also actively exporting produce to Russia. In early September, 906 tons of fresh vegetables were successfully shipped to the Zabaikal region. Fresh vegetables exported to Russia include eggplants, radishes, cucumbers, and zucchini. 275 tons of fresh garlic, 400 tons of peppers, 132 tons of onions, 44 tons of carrots, and 33 tons of ginger were exported.

Morocco remains the biggest blueberry exporter to Russia

Russia has increased its imports of blueberries by 61% (value) between January and June 2020. In fact, they reached 4.200 mt worth 30,5 million dollars. For the Russian Federation, Morocco is at №1 in the ranking of the main supplier countries of these fruits.

The Russians spent $13,7 million on Moroccan blueberries. They imported 1.900 mt of these blueberries from the Kingdom, 36,4% more than a year earlier. Chile, which occupies the second place in the ranking of suppliers, has more than doubled its shipments of “blueberries” to Russia, up to 1.000 mt. explains this means, Morocco and Chile account for almost 80% of all imports of this agricultural product in Russia. The third and fourth largest exporters of blueberries to Russia are occupied by Peru and Serbia. In fact, these two countries increased their exports of this fruit to Russia by 75% and 95%, respectively.

Euro rises above 90 rubles first time since February 2016

The euro rose by 0.98%, reaching 90.1 rubles on the Moscow Exchange on Monday.

The last time the euro was above 90 rubles in February 2016.

As of 13:15 Moscow time, the euro rate was at around 89.97 rubles (+0.83%), and the dollar rate grew by 0.92% to 76.13 rubles.

At the same time, the price of November futures contract for Brent crude oil on London’s ICE decreased by 1.78% to $41.9 per barrel. WTI crude was trading at $39.39 per barrel (-1.89%).

The Ministry of Agriculture expects an increase in apple harvest within 10 years

The Ministry of Agriculture expects an increase in apple harvest within 10 years. In the next five years, the total apple harvest in the country will double, said the first deputy head of the department, Dzhambulat Khatuov.

“Today we consume 3.5 million MT of apple, we produce just over 1 million MT. The existing ambitions suggest that in the next five years we will double the volume of production. <…> And this dynamics, as we see it, will last at least 10 years “, – said Khatuov.

He explained that, among other things, modern technologies that are being introduced by farmers make it possible to increase production volumes: they create new apple orchards using new technologies, most of them based on the principles of intensive gardening.

“The most important thing is the state support measures. <…> The south of the country is Krasnodar Territory, Stavropol Territory, Kabardino Balkaria, Ingushetia, Dagestan, Crimea, Belgorod, Voronezh, Lipetsk are the main players that are growing in production volumes,” the deputy minister added.

X5 Opens New Logistics Facility in Tatarstan

X5 Retail Group, a leading Russian food retailer that operates the Pyaterochka, Perekrestok, and Karusel retail chains, announces the expansion of its logistics infrastructure in the Volga region and the opening of a Pyaterochka distribution centre (DC) in the Republic of Tatarstan.

With a total floor area of 18,000 sq m, the Yelabuga DC features four storage zones for fresh products, fruits and vegetables, dry goods and alcoholic beverages. Each zone has a specific temperature band that is best suited to keep relevant products fresh.

Once it reaches design capacity, the new DC will supply food products to 600 Pyaterochka stores in 300 localities across the Republics of Tatarstan and Udmurtia. The logistics facility is expected to process 1,500 tonnes of goods per day, with its seamless operation supported by more than 250 employees and some 100 vehicles. Overall, Pyaterochka has generated over 10,700 jobs in the Republic of Tatarstan.

The launch of the new DC will enable Volga region food producers not only to reduce their transportation costs, but also to expand the geography of their sales. At full capacity, the logistics facility will be able to handle about 500 suppliers, further increasing the share of Tatarstan producers in the chain’s regional sales beyond the current level of over 30%. Today, Pyaterochka retail chain works with 88 local suppliers, of which 18 were added to the supplier list in 2019.

The Yelabuga DC is the second advanced logistics facility opened by Pyaterochka in the Republic of Tatarstan. In November 2019, the Kazan DC was opened in Zelenodolsk, bringing the total floor area of Pyaterochka’s warehouse facilities in the region to over 57,000 sq m. Today, the Republic of Tatarstan has more than 700 Pyaterochkas, including 24 stores that opened this year.

The opening ceremony was attended by Alexey Pesoshin, Prime Minister of the Republic of Tatarstan, Sergei Goncharov, General Director of Pyaterochka, and executives of suppliers from the Volga Federal District invited by X5.

Russia: Online Purchases Tripled

According to a study by Russian Standard Bank, in H1 of 2020, the number of Russian online purchases has tripled compared to the same period last year.

“The first six months of this year showed that Russians easily replaced traditional shopping in stores with online shopping. An analysis of transactions with cards of all banks in the Internet acquiring network of Russian Standard Bank showed that their number, compared to the same period in 2019, increased three times, and the total turnover – 2.3 times. At the same time, the total average check for online purchases decreased by 22% and amounted to 1,673 rubles,” the bank’s representatives said.

Most often, Russians made purchases in clothing stores (the average check was 2,273 rubles) and in supermarkets (the average check was 2,267 rubles). After the quarantine restrictions were lifted, spending on online shopping began to grow again. In June, the average check increased by 8% compared to April and returned to the numbers of January 2020.

Berry Production in Russia Is Forecast to Decrease This Year

As of August 4, the production of commercial berries in Russia amounted to 10,800 MT, which is 35% more than in the same period of 2019 (8,000 MT), reports the Ministry of Agriculture. Kabardino-Balkaria, Altai Territory, Oryol, Moscow, Lipetsk Regions, and Krasnodar Territory are the leading regions in terms of gross harvest.

However, industry analysts believe that this year’s overall harvest of the berries will be lower than in 2018. According to the company “Technologies of Growth”, the production will amount to 18,000 MT, compared to 18,700 MT a year before. According to the forecasts of the Berry Union, the berry harvest this year will be about 20% lower than in 2019.

The Southern District was affected by frosts and hail, so the gross harvest of strawberries in the Krasnodar Territory decreased compared to last year harvest. Rains also affected the quality and quantity of the crops. Due to the restrictions imposed during the coronavirus crisis, most berry producers dealt with a shortage of seasonal workers as they could not enter Russia from the neighboring countries. Many farms had difficulties with the sales and shipments of their products.

Russian Central Bank: Russia’s Further Economic Recovery Can Be Unstable

Russia’s further gradual economic recovery may be unstable amid restrained consumer behavior, the Central Bank said in its report on monetary policy.

According to the Bank of Russia, further gradual economic recovery can be unsustainable due to the decline in income, restrained consumer behavior, cautious business sentiments, as well as restrictions on the part of external demand.

“Taking into account these factors, according to our forecast, GDP will decline by 4.5-5.5% this year,” the regulator said.

Earlier, head of the regulator Elvira Nabiullina noted that after a pandemic of a new coronavirus infection the Russian economy could recover in more than 1.5 years. At the same time, the regulator does not yet see the need for additional measures to support the economy. The Central Bank expects that the revival of the national economy will not “fizzle out” in the fourth quarter and the recovery will continue.

Euro Reaches 88 Rubles First Time from March 30

The euro added 1.56% and climbed to 88 rubles during the trading session on the Moscow Exchange on Friday, according to trading data.

The euro was at such level last time on March 30 of this year.

The euro decelerated later on to the increase by 1.13% and was traded at 87.63 rubles. The dollar rose by 1.6% to 74.34 rubles at the same time.

Brent oil futures prices with settlement in October 2020 dropped by 0492% to $43.04 a barrel on the London-based ICE today. The WTI oil was traded at $39.76 a barrel, down 0.4%.