April 2010

Russia: Macroeconomic forecasts

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• Analysts forecasts
• Macroeconomic Indicators
• Consensus-forecasts

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Consensus-forecasts of fundamental Russian macroeconomic indicators

Information providers Consensus-forecasts of fundamental Russian

%,YoY
27
macroeconomic indicators $bn
205
22 Trade balance, $bn
• The World Bank 155
Capital expenditures
17 Real disposable incomes
105
• IMF 12
7 55
• HSBC 2 5
-4
• Bank of America Securities & Merrill Lynch -45
-9
-95
• Raiffeisen Research -14
-19 -145
• UBS

• Capital Economics
Source: Rosstat, RBC Consensus-forecasts
• Deutsche Bank

• Sberbank
Russian economy indicators 2010f 2011f 2012f
• UniCredit Securities
GDP,% 4.4 4.1 4.7
• Troika Dialog
Industrial production,% 5.4 4.9 5.1
• BDO in Russia
Real disposable incomes,% 2.9 4.1 8.2
• Renaissance Capital
Capital expenditures,% 4.7 6.2 11.1
• Uralsib
Inflation,% 7.4 7.6 7.6
• Bank of Moscow
Unemployment,% 8.3 7.8 6.9
• Other
Trade balance, $bn 133 123 120

Exports, $bn 364 397 447

Imports, $bn 241 272 318

RBC · Department of analytic information 1

MACROECONOMIC · FORECASTS April 2010

GROSS DOMESTIC PRODUCT

Data by Ministry for Economic Development of the Russian Federation show that Russian economy grew 0.6% QoQ in Q110. It was up
4.9% YoY and 0.2% MoM (excluding seasonality) in March. Ministry for Economic Development of the Russian Federation expects
Russian GDP to increase by 3.0-3.5% in 2010, 3.4% in 2011 and 4.2% in 2012.

Russian Real GDP Year-over-Year, %

11
GDP, %
9
Forecast
7
5
3
1
-1
-3
-5
-7
-9
-11

Source: Rosstat, RBC Consensus-forecasts

Capital Economics
In the near-term, the pace of Russia’s recovery will depend to a large extent on the path of oil prices, Capital Economics analysts believe.
But a more likely scenario is that oil prices fall back as the pace of global recovery ultimately disappoints and the dollar rebounds further.
This in turn is likely to lead to a renewed capital outflow, which will put the banking sector under renewed pressure. And while the low
level of government debt means that there is less pressure to rein in stimulus measures than in parts of the Western world, fiscal policy
will still have to tighten more quickly than would otherwise be the case. So although, according Capital Economics analysts, a one-off
boost from the inventory cycle should ensure that GDP expands by 5% this year, they expect growth to fade to just 2% in 2011.

Russian Real GDP Forecasts Year-over-Year, %

2010f 2011f 2012f 2013f
Consensus 4.4 4.1 4.7 5.1
Median 4.5 4.2 4.6 5.0
Allianz 4.0 4.5 - -
Commerzbank & Dresdner Kleinwort 5.5 4.5 - -
HSBC 4.7 3.0 - -
IMF 4.0 3.3 3.7 4.1
Bank of America Securities & Merrill Lynch 7.0 - - -
BNP Paribas 4.9 4.2 4.5 -
The World Bank 5.5 3.5 - -
Troika Dialog 5.2 4.9 - -
UniCredit Securities 2.7 5.2 3.9 -
BDO in Russia 2.5 3.0 - -
Uralsib 5.5 5.9 6.3 6.6
UBS 5.6 4.4 - -
Renaissance Capital 4.2 - - -
Capital Economics 5.0 2.0 - -
Bank of Moscow 7.0 5.5 5.6 -
Alfa-Bank 3.6 2.0 - -
Wells Fargo Securities 3.6 4.1 - -
Deutsche Bank 4.0 4.5 5.0 5.0
Barclays Capital 4.6 3.6 - -
Economist Intelligence Unit 3.5 4.3 4.7 4.6
Citigroup 6.2 4.0 4.3 5.0
Goldman Sachs Group 4.5 5.5 - -
TD Bank Financial Group 4.7 4.9 - -
Credit Agricole Group 3.5 4.5 - -
Nomura 5.5 4.4 - -
Credit Suisse 3.6 4.9 4.6 -
Danske Bank 2.5 3.0 4.2 -
CIBC 3.0 4.0 - -
Nordea 2.8 4.2 - -
Lloyds TSB 4.7 5.2 - -
Sosiete Generale 5.5 2.5 - -
The Royal Bank of Scotland 3.2 2.4 - -
Source: investment companies data

RBC · Department of analytic information 2

MACROECONOMIC · FORECASTS April 2010

INDUSTRIAL PRODUCTION

Industrial Production in Russia rose by 5.8% YoY in Q110. It was up 5.7% YoY and 15.3% MoM in March 2010. It should be noted that IP
fell 10.8% in 2009. Ministry for Economic Development of the Russian Federation expects Industrial Production in Russia to increase by 1-
2% in 2011 and 1.5-3% in 2012.

Russian Industrial Production Index

Year-over-Year, %
20
Industrial production, %
15
Forecast

10

-5

-10

-15

-20

Source: Rosstat, RBC Consensus-forecasts

Bank of Moscow Renaissance Capital

YoY performance of Russian IP sharply improved in March in There is still no possibility to track the historical performance of
comparison with February when IP growth was merely 1,9% industrial output in Russia on a seasonally adjusted basis, as the
YoY. As IP (seasonally adjusted) was a bit higher in March 2009 historical data were not recalculated after Rosstat changed its
than in February 2009, Bank of Moscow economists conclude that methodology, Renaissance Capital economists note. Relying on
last month saw quite a strong rise in the manufacturing sector. seasonally adjusted data provided by Rosstat, industrial
However they cannot correctly estimate (exclude seasonality) production dynamics in March were negative. This supports the
these dynamics for now as Rosstat (that changed the view of Renaissance Capital economists that the recovery in
methodology for the calculation of the industrial production industrial output is unstable and the result of a low base and
index in the beginning of this year) failed to produced government stimulus measures.
retrospective data. In other words, there are no doubts among
economists about the fact that industrial output in Russia
increased in March, but they cannot say how strong this increase
was. According to their estimates, industrial production is likely
to continue to show positive performance in Q210 with YoY
figures being able to rise considerably (at least to 7-8%) due to a
low base effect. So Bank of Moscow maintains its forecast for IP
to grow by 8% in 2010.

Russian Industrial Production Index Forecasts Year-over-Year, %

2010f 2011f 2012f

Consensus 5.4 4.9 5.1
Median 5.0 4.7 4.6
HSBC 5.8 4.8 -
Bank of America Securities & Merrill Lynch 4.7 3.7 -
BNP Paribas 4.7 4.0 3.8
Troika Dialog 5.0 4.7 -
BDO in Russia 5.0 4.0 -
Uralsib 8.2 6.5 6.9
UBS 8.3 4.5 -
Renaissance Capital 4.1 - -
Bank of Moscow 8.0 5.0 4.6
Alfa-Bank 4.0 - -
Barclays Capital 3.0 6.5 -
Danske Bank 3.0 4.0 -
Lloyds TSB 6.5 6.4 -
Source: investment companies data

RBC · Department of analytic information 3

MACROECONOMIC · FORECASTS April 2010

CAPITAL EXPENDITURES

Fixed capital investments in Russia fell 4.7% YoY to RUR 1,238trn in Q110. According to Rosstat preliminary estimates, investments
increased by 0.7% YoY and 21% MoM to RUR 500.2bn in March 2010. Investments were RUR 418.7bn in February 2010 and RUR 319.2bn
in January 2010. Ministry for Economic Development of the Russian Federation expects Investments in Russia to increase by 1.1-4% in
2010, 3.6-9.4% in 2011 and 8.6-12% in 2012.

Russian Capital Expenditures Year-over-Year, %

30

20 Investment, %
Forecast

10

-10

-20

-30

Source: Rosstat, RBC Consensus-forecasts

UBS UniCredit Securities

Again, the rise in investment in Russia clearly shows that
confidence continues to return. It also matches the data coming
from the banking sector that showed (excl. Sberbank) corporate
loan books expanding by 2% in March, the first such rise since
the crisis. Given mostly clean balance sheets and a banking sector
flush with Ruble funds, UBS economists see no reason to believe
that this trend will not continue.
UniCredit Securities economists generally tend to attribute the
renewed investment growth in Russia to a low base effect
underpinned by the positive influence of lower interest rates and
higher consumer and budget demand. They believe this will
support investment recovery throughout 2010 and forecast
investment to increase by 3% in 2010.

Russian Capital Expenditures Forecasts Year-over-Year, %

2010f 2011f 2012f

Consensus 4.7 6.2 11.1
Median 4.4 6.5 10.4
HSBC 3.0 5.5 -
Bank of America Securities & Merrill Lynch 7.5 6.5 -
BNP Paribas 7.5 8.0 7.0
Troika Dialog 5.0 7.0 -
UniCredit Securities 3.0 - -
BDO in Russia 3.0 5.0 -
Uralsib 6.1 9.0 10.4
UBS 4.4 8.0 -
Renaissance Capital 4.5 - -
Capital Economics 4.0 2.5 -
Bank of Moscow 10.0 12.0 16.0
Alfa-Bank 7.0 4.0 -
Barclays Capital 4.7 4.0 -
Citigroup 4.0 7.5 -
Danske Bank 0.5 2.0 -
Nordea 4.0 5.0 -
Lloyds TSB 2.1 6.8 -

Source: investment companies data

RBC · Department of analytic information 4

MACROECONOMIC · FORECASTS April 2010

REAL DISPOSABLE INCOMES

According to Rosstat preliminary estimates real disposable incomes (excluding compulsory payments adjusted for CPI) increased 7.4%
YoY in Q110 and grew 4.2% YoY and 2.3% MoM in March 2010. Average nominal monthly wage per capita amounted to RUR20160 in
March 2010, i.e. It was 10.1% higher YoY and 2.3% higher MoM.

Russian Real Disposabole Incomes Year-over-Year, %

20

15
Russian Real Disposable Incomes

10 Forecast

-5

-10

-15

Source: Rosstat, RBC Consensus-forecasts

Troika Dialog Bank of America & Merrill Lynch

Real wages in Russia increased by 2% in January-February 2010 Russian real retail sales have risen only +0.8%YoY in Jan-Feb. The
to the 2M09 levels. This increase was in line with the growth in fact that this was below real wage growth (+2%) and real
production. Troika Dialog economists consider wages growth disposable income growth (+9%) suggests that consumers remain
data to be quite reliable as they are close to retail sales growth uncertain about the outlook – but this should change soon as the
data. However, they believe that methodologically official recovery progresses, Bank of America & Merrill Lynch economic
estimates of real disposable incomes are not quite correct (+8,1% team believes.
in comparison with an-Feb2009 levels). Apart from personal
incomes, official statistics take into account foreign currency sales
though the latter should be regarded as changes in net individual
savings. Rouble was up in Jan-Feb 2010 and Russian citizens
converted foreign currency to Rouble assets, which "artificially"
increased official personal income data, whereas real personal
income growth was about 1-2%, Troika Dialog economists note.

Russian Real Disposable Incomes Year-over-Year, %

2010f 2011f 2012f

Consensus 2.9 4.1 8.2
Median 2.9 3.5 7.7
Troika Dialog 2.5 3.0 -
UniCredit Securities 2.9 5.4 7.7
BDO in Russia 3.0 3.0 -
Uralsib 3.4 3.5 6.8
Bank of Moscow 2.5 5.5 10.0

Source: investment companies data

RBC · Department of analytic information 5

MACROECONOMIC · FORECASTS April 2010

CONSUMER PRICE INDEX

Russian Consumer Price Index was up 0.6% MoM and 3.2% YTD in March 2010. Consumer prices increased 6.5% YoY in March with food prices
climbed 4.8%, non-foods prices – 6.6% and service prices – 8.4%.

Russian Consumer Price Index Year-over-Year, %

30

25
Inflation, %
20 Forecast

15

10

Source: Rosstat, RBC Consensus-forecasts

Uralsib
Uralsib economists forecast further slowdown in inflation in April
and thus wouldn't be surprised if it approached 6% YoY. Inflation is
likely to stabilize on 6-7% level in May-June 2010 and then to
gradually accelerate as we will be heading Autumn. Uralsib
economists expect CPI inflation in Russia to reach 8-9% in 2010
reflecting higher domestic and external demand, milder deflationary
trends due to the crisis, and seasonal factors that take place after
harvesting.
UBS
Inflation in Russia came in in-line with the forecast of UBS and was
lower than 0.8% consensus. On the one hand this is a reflection of the
positive base effect, while on the other hand is another confirmation
of the monetary authorities continuing to concentrate on inflation
controls, allowing the currency to strengthen further in H2 2010, UBS
economists note. As a result, they see inflation reaching 6.0% by
year-end.

Russian Consumer Price Index Forecasts Year-over-Year, %

2010f 2011f 2012f 2013f
Consensus 7.4 7.6 7.6 6.6
Median 7.5 7.7 7.9 6.6
Allianz 6.9 6.7 - -
Commerzbank & Dresdner Kleinwort 7.5 8.0 - -
HSBC 7.3 10.5 - -
IMF 6.0 5.4 5.0 5.0
Bank of America Securities & Merrill Lynch 8.0 8.5 - -
BNP Paribas 8.0 10.0 9.0 -
The World Bank 8.0 - - -
Troika Dialog 6.0 4.5 - -
UniCredit Securities 8.4 - - -
BDO in Russia 8.7 7.5 - -
Uralsib 9.0 8.8 7.9 7.4
UBS 6.0 5.8 - -
Renaissance Capital 6.3 - - -
Capital Economics 6.0 6.0 - -
Bank of Moscow 5.5 7.0 8.2 -
Alfa-Bank 8.0 9.0 - -
Wells Fargo Securities 6.8 8.8 - -
Deutsche Bank 8.1 7.3 8.0 7.5
Barclays Capital 8.0 7.8 - -
Economist Intelligence Unit 8.1 7.3 7.4 6.6
Citigroup 8.9 7.6 - -
Goldman Sachs Group 5.3 6.6 - -
Credit Agricole Group 8.0 8.5 - -
Nomura 7.5 - - -
Credit Suisse 7.5 6.4 6.0 -
Danske Bank 7.3 8.0 9.6 -
Nordea 7.7 8.0 - -
Lloyds TSB 8.0 7.7 - -
Sosiete Generale 8.0 8.0 - -
The Royal Bank of Scotland 7.3 7.9 - -
Source: investment companies data

RBC · Department of analytic information 6

MACROECONOMIC · FORECASTS April 2010

RUSSIAN LABOUR MARKET

The total number of the unemployed was 6.4 mln in March 2010 (8.6% of economically active population) and 5.8% MoM. State
employment agencies registered 2.2 million of the unemployed, including 1.9 million of those who was on a dole. According the
preliminary results of employment survey, the number of economically active population in March 2010 amounted to 74.6 million or
more than 52% of the total Russian population.

Russian Unemployment Rate Year-over-Year, %

12

11
Unemployment, % Forecast
10

Source: Rosstat, RBC Consensus-forecasts

IMF Capital Economics

According to IMF analysts view, the economic recovery is likely The UN predicts that the Russian population will shrink by
to have a limited impact on labor markets with modest nearly 8m (5%). This will have a number of severe consequences
employment growth likely to prevail in the medium term. In for the economy. Most obviously, the labour supply will shrink.
experts opinion, unemployment is expected to stay around 9 Left unchecked, the drop in the working age population on its
percent in Q1-2010, with some improvement throughout the year, own could reduce output by around 0.5% per annum over the
mostly a result of higher seasonal employment. Only when the next forty years or so, Capital Economics analysts forecast.
economic growth becomes more broad based and robust, it is
likely to see sustained improvements in the labor market,
probably in 2011, analysts suppose. Tight credit conditions and
high unemployment continuing to weigh down on household
income and wages are unlikely to improve fast enough to
provide large and sustained boost to consumption.

Russian Unemployment Rate Forecasts Year-over-Year, %

2010f 2011f 2012f

Consensus 8.3 7.8 6.9
Median 8.1 7.9 7.0
Bank of America Securities & Merrill Lynch 9.0 8.5 -
BNP Paribas 8.0 7.5 7.0
Troika Dialog 7.5 7.0 -
BDO in Russia 8.9 8.9 -
Uralsib 8.1 7.9 6.3
UBS 7.8 7.2 -
Renaissance Capital 9.8 - -
Capital Economics 9.0 9.0 -
Bank of Moscow 7.5 6.9 6.1
Alfa-Bank 8.3 8.0 -
Barclays Capital 7.7 7.5 -
Citigroup 8.0 8.0 -
Danske Bank 9.0 8.5 8.0
Nordea 7.2 6.8 -
Lloyds TSB 8.1 7.6 -

Source: investment companies data

RBC · Department of analytic information 7

MACROECONOMIC · FORECASTS April 2010

RUSSIAN FOREIGN TRADE

Foreign trade turnover in Russia (according to current account methodology) amounted (in real operated prices) to US$46.1 bn (RUR 1390.4
bn) in February 2010. Export totaled US$30.6 bn (RUR 924 bn), import amounted to US$15.4 bn (RUR 466.4 bn). The trade surplus totaled
US$15.2 bn in February 2010 (in February 2009 it was US$5.1 bn).

Russian Foreign Trade Balance $bn

50
45
40
Export
35
30
25 Import

20
15 Foreign Trade Balance
10
5
0

Source: Rosstat, RBC Consensus-forecasts

UniCredit Securities Renaissance Capital

Russian foreign trade balance surplus was better than expected in
February. The main factor accounting for this result was strong
export growth of c65% YoY to USD 30.6bn vs. forecast of USD
29bn, UniCredit Securities economists believe. Export was USD
27.9bn in January 2010. Indeed oil prices were generally lower in
February than in January, so export growth was driven by
continuing recovery of physical supply rather than by rising
prices. On the other hand, imports growth were in line with
expectations – they climbed 14.7% YoY to USD 15.2 bn. Higher
foreign trade surplus seems to be positive sign for the Rouble that
reflects continuing strong foreign currency inflows in Russia,
economists note.
Renaissance Capital economic team expects the Russian trade
balance is likely to fall further due to stable export conditions and
a pickup in imports (as consumer confidence recovers). The trade
balance continues to be the main driver of the current account’s
surplus, which currently is the main source of liquidity for
Russia’s economy. Thus the liquidity conditions in Russia is
likely to be positive through the year, Renaissance Capital
economists expect.

RUSSIAN EXCHANGE RATE

RUB/USD
38

35
RUB/USD
Forecast
32

29

26

23

20

Source: CBR, RBC Consensus-forecasts

Lloyds TSB
While economic prospects in Russia for this year may be less buoyant than in countries like China, the rouble is fundamentally well-
supported against the US dollar, Lloyds TSB economists suggest. However, some weakening seems likely as we head towards the end of
this year, reflecting broad-based strength in the US dollar as the US economic recovery becomes more firmly entrenched. Lloyds TSB end-
2010 forecast stands at 29.49 with very little in the way of further change looking into next year.

RBC · Department of analytic information 8

MACROECONOMIC · FORECASTS April 2010

Russian Foreign Trade Balance Forecasts $bn

2010f 2011f 2012f

Trade balance

Consensus 133 123 120

Median 130 124 100
Bank of America Securities & Merrill Lynch 155 130 -
BNP Paribas 123 110 100
Troika Dialog 125 105 -
BDO in Russia 100 85 -
Uralsib 138 155 164
UBS 130 146 -
Bank of Moscow 160 130 95
Citigroup 130 124 -

Exports

Consensus 364 397 447

Median 370 397 -
Allianz 370 389 -
Bank of America Securities & Merrill Lynch 390 405 -
Troika Dialog 370 395 -
BDO in Russia 310 350 -
Uralsib 371 415 439
UBS 371 407 -
Renaissance Capital 349 - -
Bank of Moscow 390 420 455
Citigroup 359 397 -

Imports

Consensus 241 272 318

Median 235 274 -
Allianz 235 259 -
Bank of America Securities & Merrill Lynch 235 275 -
Troika Dialog 245 290 -
BDO in Russia 210 265 -
Uralsib 233 260 275
UBS 241 261 -
Renaissance Capital 311 - -
Bank of Moscow 230 290 360
Citigroup 229 274 -

Source: investment companies data

RBC · Department of analytic information 9

 April 2010

Disclaimer Authors

This report is published solely for information purposes, it does not "RosBusinessConsulting“
constitute an advertisement and is not construed as a solicitation or an Department of analytic information
offer to buy or sell any securities or related financial instruments. The tel. +7 (495) 363-11-11
information contained herein is obtained from the resourses that RBC
regards as credible. The company and authors of the reseach are not Aleksandr Yakovlev
responsible for any liability of investment losses obtained due to use of Head of Department of analytic information
the information contained in the document. Investments involve risks jack@rbc.ru
and investors should exercise prudence in making their investment
decisions. Then the report should not be regarded by recipients as a Inga Sangalova
substitute for the exercise of their own judgement. Senior analyst
isangalova@rbc.ru

Valentina Gavrikova
Analyst
vgavrikova@rbc.ru

Anastasia Shmarina
Technical editor
ashmarina@rbc.ru

RBC · Department of analytic information 10