Russia's economic performance and investment landscape may not be as negative as current growth statistics suggest, according to BCS Global Markets' latest Outside the Box report.
The report, the second of its kind in collaboration with leading Russian analysts Alexander Kudrin and Evgeny Gavrilenkov, highlights that Russia's economic performance is in a strong position overall, despite current GDP figures, which - as seen in previous years - could be revised up.
BCS Global Market's (BCS GM) research team has found that very strong tax collections from the non-oil segments of the economy has meant the Russian government's finances are now in surplus.
Declining consumer demand and Russia’s so-called two-tier economy – whereby banks, mining companies and the government perform considerably better than other economic sectors – continues to be a weakness for the Russian economy."
And with inflation expected to fall to 3.5% before the end of 2019 (well below the CBR's initial targets), such collections present an opportunity to bolster Russia's economy in the long term.
Additionally, foreign investor appetite for Russian government debt has seen Rb1.6tn placed in Ruble Sovereign Bonds from January to August of this year, with the greatest demand coming from investors overseas.
Declining consumer demand and Russia's so-called two-tier economy - whereby banks, mining companies and the government perform considerably better than other economic sectors - continues to be a weakness for the Russian economy.
However, BCS GM and GKEM ANALYTICA argue that falling inflation and the strong fiscal position of the treasury will facilitate government action that supports economic growth. Less hawkish macroeconomic policies and increasing and reprioritising government spending has the potential to kick-start sluggish domestic consumption.
Kirill Chuyko, head of BCS GM Research team, said: "The Outside the Box report brings together two of Russia's brightest and widely recognized financial analysts and an award winning, globally renowned, growing team of BCS GM analysts."
"International institutional investors have come to expect increasingly complex analytical products - this report is geared to meeting that demand and only reinforces both BCS GM's and GKEM ANALYTICA's reputation as leading providers of investment products, services and insight with the Russian market at its core," Chuyko added.
Alexander Kudrin also added: "In today's world of ever-increasing market noise, top institutional investors need products and insight that cuts through the hubbub. Outside the Box not only provides market participants with the most up to date and need-to-know analysis of the Russian market, but through expertly collated research, also delivers accomplished predictions, which inform investment strategies for international players - those that are both actively investing in Russia or considering doing so."