Russia Macro Monthly eport for August 2017: Economic Recovery Solidifies
Please find Russia Macro Monthly report for August 2017, prepared by Chris Weafer, Senior Partner at Macro-Advisory Ltd from Moscow. Short summary of the report:

Economic Recovery Solidifies
Economic recovery is solid. The Economy Ministry expects Q2 GDP growth may be 2.7%, bringing growth for 1H to 1.6% and ahead of consensus for the full year. That is still on the optimistic side. The Gaidar institute forecasts average growth at 1.5% for 2017 & 2018.
Driven by both investment and consumption. Q2 investment growth was faster than the 2.3% seen in Q1, while, in June, consumption grew by 1.2% YoY and looks set to strengthen in 2H. Confidence indicators weaker, but still positive. Manufacturing and services PMI are both still in expansionary territory, but not as high as earlier in the year. Lending to SMEs is recovering, according to CBR data, and the average interest rate is falling.
Sanctions. President Trump, reluctantly, signed the new sanctions bill into law. The new law does not immediately impose new sanctions but raises considerable concern over future expansion and adds to Russia risk uncertainty which may slow inward investment.
Muted Russian reaction. The government’s only reaction was to replicate the US expulsions of Russian diplomats (albeit a larger number) of last December. So far there are no signals of any further actions but that may change after the vacation period.
Far East Forum. The next major event will be the BRICS Forum in China in late August and the Far East Economic Forum in early September. Russia has simplified the visa process to attract delegates and clearly hopes to show strong Asian investor interest.