Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
Russia's National Welfare Fund accounts for almost 12% of GDP
Police arresting activists ahead of Saturday’s demonstration in support of Navalny
Biden seeking a five-year extension to START II missile treaty
Russian consumer confidence index drops q/q, y/y in 4Q20
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
Private finance mobilised by development banks up 9% to $175bn in 2019
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Albania needs reforms for e-commerce to thrive, says World Bank
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegrins say state administration is most corrupt institution
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
OUTLOOK 2021 Romania
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Iran’s Khamenei menaces private citizen Trump with image of aircraft shadowing blond golfer
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
More...
The headline seasonally adjusted IHS Markit Russia Manufacturing PMI bounced back in June at the end of the second quarter, recovering almost all the ground it has lost during the coronacrisis to post 49.4 at the end of the second quarter, just below the 50 no-change mark, IHS Markit said in a press release on July 1.
The June result is up from the deep contraction in manufacturing of 36.2 in May.
The manufacturing PMI plunged to 31.1 in April as Russia’s economy came to a standstill as the coronavirus (COVID-19) epidemic got underway and the country was put on lockdown. It recovered somewhat in May to 36.2, but that was still a very deep contraction.
At the same time, the services PMI crashed to an 18-year all-time low in April, a stunning 12.2, as restaurants, hairdressers and other services simply stopped working for two months. Services bounced back in May to 36.2 as the population got used to the restrictions.
Taken together, the IHS Markit Composite PMI Output Index posted 35.0 midway through the second quarter, up from April's record low of 13.9, but was still deeply in the red.
June’s manufacturing result is encouraging as the forward looking indicator, based on interviews with hundreds of firms, suggests the worst of the crisis is over. The services index will be out in the next few days and will almost certainly show a similar bounce-back, although it will likely also show that services also contracted in absolute terms.
“The latest figure signalled only a fractional decline in manufacturing sector performance, and one that was the slowest since May 2019,” Markit said in a statement.
Output and new orders have returned to growth in June after Russia’s lockdown came off at the start of the month. The renewed increase in client demand was only fractional, however, as customers gradually resumed operations following the coronavirus (COVID-19) outbreak, according to Markit.
Responding to the collapse in demand, manufacturers had been sacking workers in the last two months, but the fall in employment slowed in June as the market stabilised. However, the number of registered unemployed has risen 3.5-fold since April, according to Prime Minister Mikhail Mishustin, to 6.1%, up from around 4.4%-4.6%% in recent years.
“Despite growth in new orders, manufacturers continued to cut workforce numbers at the end of the second quarter amid signs of spare capacity and historically muted demand. Companies highlighted that redundancies and the non-replacement of employees were behind the solid fall. At the same time, backlogs of work were reduced further,” Markit said.
Business confidence has also picked up amid hopes of greater client demand in the rest of this year, although the majority of businesses see this year as being a lot worse than last year.
Two-thirds of Russia’s entrepreneurs see the outlook for the Russian economy as negative, according to a survey included in Presidential Ombudsman for Business Boris Titov’s annual report, TASS reported.
The survey was conducted in February-March 2020 by the service of special communications and information of Russia’s Federal Guard Service. Owners of enterprises (56.7%), heads of enterprises (25%), deputy heads of enterprises (10.4%) and managers (7.9%) participated; all in all, 7,733 people.
“Two-thirds of respondents (68.3%) negatively estimate the state of the Russian economy,” the research said. Particularly, 52.2% of respondents described it as ‘problematic’, while 16.1% said it was ‘disastrously recessionary’.
As many as 15.1% of respondents considered the Russian economy stable, whereas 3.5% referred to its state as ‘good’. The remaining 13.1% of participants were undecided.
The Markit poll is a good sign, as it is forward-looking and suggests that some optimism for a recovery in the rest of the year is returning.
Inflation has been another concern but here the news is a lot better. While inflationary pressures spiked following a circa 20% devaluation of the ruble during the worst of the crisis months, that effect has been offset by the collapse in demand and the fall in retail sales turnover as a result of the lockdowns.
Russia's consumer price inflation (CPI) decelerated to 0.3% month on month in May 2020 from 0.8% seen in April, according to the latest data from Rosstat statistics agency. Annual inflation moderated to 3% in May from 3.1%, well below the Central Bank of Russia (CBR) target rate of 4%.
As reported by bne IntelliNews, inflation spiked in April, but the price growth stopped in May allowing the CBR to start an aggressive monetary easing cycle that resulted in a 100bp rate cut in June to an all-time low prime rate of 4.5%.
Markit’s respondents confirm that price pressures remained soft as bottlenecks in supply chains were loosened and supplier stocks were rebuilt.
“Supporting the softer overall contraction was a renewed expansion in production in June. Although only moderate, the rate of growth was the sharpest since April 2019 as factories reopened and firms returned to work. A number of firms stated that higher output was due to the processing of orders made before the pandemic escalated, while some highlighted increased client requests,” Markit said.
New orders rose only fractionally in June, but nonetheless signalled a marked turnaround from the substantial contraction seen in May. The upturn in client demand was linked to the reopening of customer businesses.
In contrast, new business from abroad continued to decrease at the end of the second quarter, Markit reports. The downturn in new export orders was sharp overall, despite the rate of decline having eased to the softest in three months.
Despite the depressed demand and low exports, manufacturers registered the strongest degree of optimism for five months as they passed through the bowl of the crisis. Hopes of further client requests and new customer acquisitions drove positive sentiment.
“Finally, the contraction in input buying eased in June, as some firms noted an uptick in purchasing following the reopening of many factories. Both pre- and post-production inventories were depleted further as companies used stocks to fulfil new orders and backlogs of work,” Siân Jones, economist at IHS Markit, which compiles the Russia Manufacturing PMI survey, said.
Register here to continue reading this article and 5 more for free or purchase 12 months full website access including the bne Magazine for just $250/year.
Register to read the bne monthly magazine for free:
Already registered
Password could contain only a-z0-9\+*?[^]$(){}=!<>|:-_ characters and have 8-20 symbols length.
Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.
Forgotten password?
Email field can't be empty.
No user with this email address.
Access recovery request has expired, or you are using the wrong recovery token. Please, try again.
Access recover request has expired. Please, try again.
To continue viewing our content you need to complete the registration process.
Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.
If you have any questions please contact us at sales@intellinews.com
Sorry, but you have used all your free articles fro this month for bne IntelliNews. Subscribe to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free subscription to bne's digital weekly newspaper to subscribers to the online package.
Click here for more subscription options, including to the print version of our flagship monthly magazine:
More subscription options
Take a trial to our premium daily news service aimed at professional investors that covers the 30 countries of emerging Europe:
Get IntelliNews PRO
For any other enquiries about our products or corporate discounts please contact us at sales@intellinews.com
If you no longer wish to receive our emails, unsubscribe here.
Magazine annual electronic subscription
Magazine annual print subscription
Website & Archive annual subscription
Combined package: web access & magazine print annual subscription