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World Economy

OPEC Monthly Oil Market Report – August 2017

19

The services sector remained in the contraction territory in July. The IHS Markit Brazil Services PMI

Business Activity Index registered 48.8 in July, from 47.4 in June. Services output declined at softer rate in

July.

Graph 3 - 10: Brazilian manufacturing and

services PMIs

Graph 3 - 11: Brazilian consumer confidence

index

Household consumption and investment is anticipated to pick up next year due to low inflation and reduced

interest rates.

Brazil’s GDP

is expected to grow by 0.5% and 1.5% in 2017 and 2018, respectively.

Russia

Household consumption posted its first growth in 1Q17 after two consecutive years of contraction. It grew by

2.7% y-o-y in 1Q17, compared to a 3.2% y-o-y contraction in the previous quarter. Gross Fixed Capital

Formation (GFCF) also increased in 1Q17 for the first time in nearly three years. It expanded by 2.3% y-o-y

in 1Q17 from a 0.3% y-o-y drop in 4Q16. Net exports, however, were lower by 17.6% y-o-y in 1Q17,

compared to growth of 21.5% in 4Q16. Imports increased much faster than exports. Imports expanded by

16.5% y-o-y in 1Q17 in contrast to a 7.1% y-o-y growth in exports. Improvements in

household

consumption

and

GFCF

were larger than the negative impact of lower

net exports

in 1Q17, leading to

growth of 0.5% y-o-y in GDP.

The

ruble depreciated

by 3.2% m-o-m in July. For the first time since June 2016,

inflation

increased.

Inflation rose to 4.4% y-o-y in June 2017, compared to 4.1% in the previous month. As inflation started

moving away from the central bank’s target of 4.0%, the central bank kept its benchmark interest rate

unchanged at 9.0% for the last month.

Graph 3 - 12: Russian inflation vs. Interest rate

Graph 3 - 13: Russian PMIs

50.0

48.8

40

45

50

55

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Index

Sources: IHS Markit and Haver Analytics.

Services PMI

Manufacturing PMI

81.8

70

72

74

76

78

80

82

84

86

88

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Index

Sources: Fundação Getúlio Vargas and Haver Analytics.

4.4

9.0

2

4

6

8

10

12

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

%

Sources: Federal State Statistics Service, Central Bank of

Russia and Haver Analytics.

Inflation rate

Interest rate

52.7

52.6

48

50

52

54

56

58

60

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Index

Sources: IHS Markit and Haver Analytics.

Services PMI

Manufacturing PMI