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World Economy

OPEC Monthly Oil Market Report – October 2017

21

Inflation

continued its quick easing trend, reaching its lowest level ever at 1.6% y-o-y in September. This

represents a quick fall in inflation from August’s 1.7%. To catch up with rapidly declining inflation, the central

bank lowered its benchmark

interest rate

by a full 10 pp in September, which now stands at 8.25%. The

unemployment rate

posted its fourth back-to-back fall in August, registering 12.6% vs. 12.8% in July.

The consumer confidence index improved in September to 84.3 from August’s 81.4.

In September 2017, business conditions in the

manufacturing sector

continued to improve due to an

ongoing production increase that reflects a continued rise in factory orders. Manufacturing production rose in

September for the seventh consecutive month and by the fastest rate since May. The IHS Markit Brazil

Manufacturing PMI stood unchanged at 50.9 in September.

The

services sector

has returned to growth in September as suggested by the IHS Markit Brazil Services

PMI Business Activity Index which registered 50.7, up from 49.0 in August. The survey showed that output

grew in September for the first time in five months, while new orders increased by the highest rate since

April. While employment in the services sector continued to decrease in September, the survey showed that

the pace of contraction was at its weakest in nearly two and a half years.

Graph 3 - 11: Brazilian manufacturing and

services PMIs

Graph 3 - 12: 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% in 2017 and by 1.5% in 2018.

Russia

Data published by Russia’s Federal Statistics Office showed that

household consumption

and

GFCF

were

the main drivers behind the strong GDP growth posted in 2Q17.

GDP

posted growth of 2.5% y-o-y in 2Q17,

up from 0.5% growth in the previous quarter. This represents the fastest rate of growth since 3Q12. Growth

of household consumption accelerated to 4.4% y-o-y in 2Q17, up from 2.7% in the previous quarter. This

also represents the highest rate of growth since 3Q13. GFCF rose by 6.3% y-o-y in 2Q17, up from a 2.3%

rise in 1Q17, its highest since 1Q12. Trade, on the other hand, offset the final GDP growth figure due to a

sharp increase in imports. While exports increased by 3.3% y-o-y in 2Q17, imports rose by more than 20%

over the same period, resulting in a drop in net exports of nearly 56% y-o-y.

The

ruble

appreciated by an average of 3.2% m-o-m in September, after being largely stable in August.

Inflation

eased in September to 3.0% y-o-y from August’s 3.3%. The central bank lowered its benchmark

interest rate by five percentage points to 8.5% in September.

50.9

50.7

42

44

46

48

50

52

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Index

Sources: IHS Markit and Haver Analytics.

Services PMI

Manufacturing PMI

84.3

74

76

78

80

82

84

86

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Index

Sources: Fundação Getúlio Vargas and Haver Analytics.