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World Economy

20

OPEC Monthly Oil Market Report – September 2017

Inflation

continued its easing trend, reaching its lowest ever rate of 2.1% y-o-y in July. This represents a

quick fall in inflation from June’s 2.6%. To catch up with rapidly declining inflation, the central bank lowered

its benchmark

interest rate

by a full 10 percentage points in July for the second month in a row, to stand at

9.25%. The

unemployment rate

posted its fourth back-to-back fall in July, registering 12.8% versus 13.0%

in June.

In August 2017, business conditions in the

manufacturing sector

continued to improve, posting solid factory

orders, especially in new orders for export, which were at their highest level since April 2016. The IHS Markit

Manufacturing PMI for the country rose to 50.9 in August, up from 50.0 in July. The services sector remained

in contraction territory in August, though showing its best performance in three months. The IHS Markit Brazil

Services JPMI Business Activity Index registered 49.0 in August, from 48.8 in July and 47.4 in June. The

survey showed a marginal uptick in the inflow of new orders, together with an output decline which slowed

over the past three months.

Graph 3 - 10: Brazilian manufacturing and

services PMIs

Graph 3 - 11: Brazilian consumer confidence

index

Household consumption is anticipated to continue improving next year due to low inflation and a reduced

interest rate. While the GFCF deceleration highlighted a notable slowdown since 2Q16, the rate of

contraction remained sizable with no obvious trend towards easing.

Brazil’s GDP

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

Russia

Russia’s GDP

posted growth of 2.5% y-o-y in 2Q17, up from 0.5% in the previous quarter. This represents

the fastest rate of growth since 3Q12, and it is the preliminary estimate of the Federal Statistics Office and no

further details are available yet.

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 with a 3.2% y-o-y contraction in

the previous quarter. The 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.

The

ruble

was largely stable on average in August, appreciating by only 0.1% m-o-m.

Inflation

eased in July

to 3.9% y-o-y, from June’s 4.4%. As the easing inflationary trend was interrupted in June, when it moved

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

interest rate

unchanged at

9.0% last month.

50.9

49.0

40

45

50

55

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Index

Sources: IHS Markit and Haver Analytics.

Services PMI

Manufacturing PMI

81.4

74

76

78

80

82

84

86

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Index

Sources: Fundação Getúlio Vargas and Haver Analytics.