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World Economy

20

OPEC Monthly Oil Market Report – November 2017

The

ruble

was largely stable in October, appreciating by only 0.03% m-o-m, vs the appreciation of 3.2%

m-o-m in the previous month, after being largely stable in August.

Inflation

eased in October to 2.7% y-o-y,

from 3.0% y-o-y a month earlier. The central bank lowered its benchmark interest rate by 25 basis points to

8.25% in October.

The IHS Markit Russia

manufacturing

PMI remained in growth territory in October, though lower than the

previous month. The survey showed some softening in the growth of production and new orders, while input

prices rose at the highest rate since mid-2017. The index slightly decreased to 51.1 in October, from 51.9 in

the previous month. The index survey showed a reduction in pressure on production capacity alongside a

minor drop in employment. The manufacturing PMI data for 3Q17 suggests a stronger growth rate compared

to 2Q17.

Industrial production

rose for the seventh consecutive month, rising by 0.9% y-o-y in September.

The

services

activity PMI suggests solid overall growth in output in October, highlighting the eleventh

consecutive month of improvements in the general business conditions in the services sector. The index

stood at 53.9 in October, from 55.2 in September. The survey highlighted softening inflationary pressure in

October. A higher degree of optimism was reported by service providers over 2018 on the back of increased

business activity. For the sixth month in a row,

retail sales

increased in September by 3.1% y-o-y, which

represents the fastest rate of growth in retail sales since December 2014.

Graph 3 - 15: Russia’s industrial production

Graph 3 - 16: Russia’s retail sales

Taking into account the broad-based improvement noted in the economy of Russia since the beginning of

the year, especially in 2Q17 and 3Q17, and its carryover to next year, when presidential elections are

scheduled to take place in March and the World Cup in mid-2018,

GDP of Russia

is now anticipated to grow

by 1.8% y-o-y in both 2017 and 2018, respectively.

India

Latest data supports that growth is picking up after the disappointing 2Q17 performance. It seems 2Q17

GDP deceleration was in part due to a slowing in the global trade recovery and in part because of the

disruption to manufacturing caused by demonetisation and the Goods and Services Tax (GST). Initial reports

on GST collection are encouraging, with the new tax generating larger-than-anticipated revenues in July,

before dipping slightly in August. Bottom-up indicators show that consumption has turned a corner.

India’s government announced that it plans to inject INR 2.1 trillion over the next two years, boosting bank

lending and rebuilding capital buffers. The injection will come in two forms: INR 1.4 trillion of "front-loaded

recap bonds" and INR 760 billion of "budgetary support and market-raising." The newly announced package

is about three times the size of the existing capital injection package that was due to run until the end of the

next financial year (fiscal year 2018–19). For the period of potential overlap, it is currently unclear if the new

injection is entirely incremental to the scheme for capital rebuilding announced in 2014.

Money Supply (M2)

in India increased to INR 29,069.06 billion in October from INR 28225.84 billion in September of 2017.

0.9

-4

-2

0

2

4

6

8

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

% change y-o-y

Sources: Federal State Statistics Service and Haver Analytics.

3.1

-6

-5

-4

-3

-2

-1

0

1

2

3

4

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

% change y-o-y

Sources: Federal State Statistics Service and Haver Analytics.