Bank of America sees signs of Russian economic recovery
28.09.2015,
10:31
Bank of America is starting to see pale signs of an economic recovery in Russia, Bloomberg reports citing Vladimir Osakovskiy, the bank's chief economist in Moscow.
YEREVAN, September 28. / ARKA /. Bank of America is starting to see pale signs of an economic recovery in Russia, Bloomberg reports citing Vladimir Osakovskiy, the bank's chief economist in Moscow.
The magnitude of a slowdown in capital investment is easing, while corporate profits have been increasing, a combination that Vladimir Osakovskiy said could mark a turning point. The country's recession may have bottomed when gross domestic product shrank 4.6 per cent in the second quarter, and considering that company spending will probably drive the recovery, that stabilization is likely to be more important for the broader economy than persistent weakness in consumer demand, he wrote in a report last week.
"Corporate profits in Russia are quite good year-to-date, and we look at robust growth in corporate profits as the main potential driver of stabilization and recovery in the near future," Osakovskiy said by phone from Moscow last week.
"We might see that the main macroeconomic indicators will start to improve on a year-over-year basis later this year, but we obviously have to wait until the increase in corporate profits spills over to the pickup in investment."
Corporate profits increased 43 per cent in the first half of 2015 compared with a year earlier and grew 38 percent from January to July, even as oil plunged further into a bear market, data from the Federal Statistics Service show. That means companies might soon look to use capital to focus on expansion, Osakovskiy said. Investment is the only way to stimulate growth in Russia's economy, Deputy Finance Minister Maxim Oreshkin said this month.
Bank of America remains neutral on Russian markets, while the price of oil, the country's biggest export, remains volatile, according to Osakovskiy. The country's stocks remains a risky buy in the near future, but their low valuations compared with equities in other emerging markets make Russia an attractive investment destination in the medium term, he said.
Last week, the first deputy chairman of the Central Bank of Russia Ksenia Yudaeva said that the downturn in the Russian economy could last a few more quarters. According to her, for the return of the economic growth structural reforms are needed aimed at increasing labor market flexibility and product markets, which will quickly redirect resources into new growth points.
Earlier, Deputy Minister of Finance of the Russian Federation Maxim Oreshkin said that until the first quarter of 2016, Russia's economy will not return to growth. According to him, the resumption of economic growth in 2015 is being prevented by low oil prices.-0-
The magnitude of a slowdown in capital investment is easing, while corporate profits have been increasing, a combination that Vladimir Osakovskiy said could mark a turning point. The country's recession may have bottomed when gross domestic product shrank 4.6 per cent in the second quarter, and considering that company spending will probably drive the recovery, that stabilization is likely to be more important for the broader economy than persistent weakness in consumer demand, he wrote in a report last week.
"Corporate profits in Russia are quite good year-to-date, and we look at robust growth in corporate profits as the main potential driver of stabilization and recovery in the near future," Osakovskiy said by phone from Moscow last week.
"We might see that the main macroeconomic indicators will start to improve on a year-over-year basis later this year, but we obviously have to wait until the increase in corporate profits spills over to the pickup in investment."
Corporate profits increased 43 per cent in the first half of 2015 compared with a year earlier and grew 38 percent from January to July, even as oil plunged further into a bear market, data from the Federal Statistics Service show. That means companies might soon look to use capital to focus on expansion, Osakovskiy said. Investment is the only way to stimulate growth in Russia's economy, Deputy Finance Minister Maxim Oreshkin said this month.
Bank of America remains neutral on Russian markets, while the price of oil, the country's biggest export, remains volatile, according to Osakovskiy. The country's stocks remains a risky buy in the near future, but their low valuations compared with equities in other emerging markets make Russia an attractive investment destination in the medium term, he said.
Last week, the first deputy chairman of the Central Bank of Russia Ksenia Yudaeva said that the downturn in the Russian economy could last a few more quarters. According to her, for the return of the economic growth structural reforms are needed aimed at increasing labor market flexibility and product markets, which will quickly redirect resources into new growth points.
Earlier, Deputy Minister of Finance of the Russian Federation Maxim Oreshkin said that until the first quarter of 2016, Russia's economy will not return to growth. According to him, the resumption of economic growth in 2015 is being prevented by low oil prices.-0-
