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World Economy

20

OPEC Monthly Oil Market Report – August 2017

The

IHS Markit Russia manufacturing PMI

signalled strong improvement in the sector’s business

conditions in July. The index rose to a six-month high of 52.7 in July, up from June’s 50.3. The index survey

showed that the highest rate of growth in production since the beginning of the year took place last month.

New businesses also expanded at a fast pace in July, hence the level of outstanding orders increased at the

fastest pace since January 2003.

Industrial production

rose by 3.5% y-o-y in June, highlighting a fourth consecutive increase. The services

activity PMI suggests a weak rate of growth in the

services sector

in July, although it expanded for an

eighth consecutive month. The index stood at 52.6 in July, down from June’s 55.5. The survey highlighted a

softer rise in service output since May 2016, alongside a nine-month low increase in new orders and the

lowest confidence since the end of 2016. For the third month in a row,

retail sales

increased in June. The

rate of increase was 1.2% y-o-y, higher than May’s 0.7%. This also represents the fastest growth in retail

sales since December 2014.

Graph 3 - 14: Russian industrial production

Graph 3 - 15: Russian retail sales

Russian GDP

is anticipated to grow by 1.2% and 1.4%, y-o-y in 2017 and 2018, respectively.

India

India's

GDP growth

is likely to be higher than 6.5% in the 2Q17 compared to the previous quarter even as

the pick-up in growth numbers in India has lost some momentum on account of the goods and services tax

(GST). In the 2H17, growth recovered to accelerate more than the average of 1Q17 and 2Q17, led by a

continuation of production after GST, as well as ongoing demonetisation, stronger rural consumption

supported by a normal monsoon season and easier financial conditions (e.g. lower lending rates and

enhanced liquidity). Excluding the GST, indicators of consumption appear to have stabilised while those for

services continue to signal an improving outlook. However, India’s economic outlook for 2017 and 2018 is

broadly positive. According to expectations, India's economy will grow by an average of 7.0% and 7.5% in

2017 and 2018, respectively. For some structural changes in India’s economy, the share of agricultural

production in GDP gradually will shrink, but the rural economy will remain a source of volatility, given its

dependence on seasonal monsoon rainfalls. The government forecasts that monsoon rainfalls in 2017 will be

broadly in line with the historical average. Despite several positive signals for India’s economy, the release of

official real GDP figures, which are still overstated, will further complicate economic analysis, which has

painted a more positive picture than that provided by a range of other indicators.

GFCF

as a benchmark of investment increased to INR9,190.40 bn (-2.07% y-o-y) in the 1Q17 from

INR8,957.40 bn in the 4Q16.

3.5

-4

-2

0

2

4

6

8

Jun 16

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

% change y-o-y

Sources: Federal State Statistics Service and Haver Analytics.

1.2

-6

-5

-4

-3

-2

-1

0

1

2

Jun 16

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

% change y-o-y

Sources: Federal State Statistics Service and Haver Analytics.