The domestic economic situation remains as in recent months.
Growth, consumption and investment have all rebounded to sustainable, high single -digit levels.
It is worth pointing out that this is very much driven by the private sector.
This is not China, where party officials and state-controlled banks inject tens of billions of dollars into so-called infrastructure projects and property speculation.
Russian industrial production in August rose by 7% year on year, while retail sales increased by 6.
5% and real wages by 6.
6% over the same period.
Inflation increased slightly to 6.
1%, but remains under control.
Bank lending remains positive but subdued, and is a critical leading indicator for future growth and asset prices in general.
Recent US dollar weakness has attracted much attention but even relative to the dollar, the ruble has been weak, losing 3%, and 6% against the euro since early August.
Russian equities have sometimes suffered from currency weakness but this was not the case in September.
As a major exporter of dollar priced commodities, relative ruble weakness should be a net positive for the country's macro position.
It is hard to explain the currency weakness with any certainty, but possible causes may include a surge in imports, resurgent domestic growth, and an unexplained significant net outflow of capital over the summer.
This needs to be watched closely but is not a major source of concern for the Manager.
The ruble may also have been affected by the government's draft budget for 2011-13 which projected deficits of 3.
6%, 3.
1% and 2.
9%, respectively.
Foreign Direct Investment (FDI) into Russia has always been a relatively weak point in an otherwise positive macro picture.
The car manufacturing and retail sectors have, to some extent, been exceptions.
September saw Hyundai open a $500 million factory in St.
Petersburg, building on a nascent but successful car industry in this relatively non-industrialized part of the country.
Membership of WTO is often cited as a vital prerequisite for significant FDI and there are tentative signs that the US has finally adopted a more reasonable policy towards Moscow on this matter.
De facto WTO membership would make little practical difference to Russia short-term, but would send a positive signal about US intentions.
Growth, consumption and investment have all rebounded to sustainable, high single -digit levels.
It is worth pointing out that this is very much driven by the private sector.
This is not China, where party officials and state-controlled banks inject tens of billions of dollars into so-called infrastructure projects and property speculation.
Russian industrial production in August rose by 7% year on year, while retail sales increased by 6.
5% and real wages by 6.
6% over the same period.
Inflation increased slightly to 6.
1%, but remains under control.
Bank lending remains positive but subdued, and is a critical leading indicator for future growth and asset prices in general.
Recent US dollar weakness has attracted much attention but even relative to the dollar, the ruble has been weak, losing 3%, and 6% against the euro since early August.
Russian equities have sometimes suffered from currency weakness but this was not the case in September.
As a major exporter of dollar priced commodities, relative ruble weakness should be a net positive for the country's macro position.
It is hard to explain the currency weakness with any certainty, but possible causes may include a surge in imports, resurgent domestic growth, and an unexplained significant net outflow of capital over the summer.
This needs to be watched closely but is not a major source of concern for the Manager.
The ruble may also have been affected by the government's draft budget for 2011-13 which projected deficits of 3.
6%, 3.
1% and 2.
9%, respectively.
Foreign Direct Investment (FDI) into Russia has always been a relatively weak point in an otherwise positive macro picture.
The car manufacturing and retail sectors have, to some extent, been exceptions.
September saw Hyundai open a $500 million factory in St.
Petersburg, building on a nascent but successful car industry in this relatively non-industrialized part of the country.
Membership of WTO is often cited as a vital prerequisite for significant FDI and there are tentative signs that the US has finally adopted a more reasonable policy towards Moscow on this matter.
De facto WTO membership would make little practical difference to Russia short-term, but would send a positive signal about US intentions.
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