SOVEREIGN ECONOMY: TOP EVENTS OF THE WEEK
The Central Bank warned about the risks of the Russian economy entering a phase of overheating. Amid the increased demand from the public sector in the second quarter, supply lags behind demand expansion. If it is impossible to close this gap by increasing imports, the economy will enter a phase of overheating, where prices will react more to further growth in demand than production.
The Russian Ministry of Economic Development estimated Russia's GDP growth in April at 3.3% against a low base. Russia's GDP growth in April 2023, according to the Ministry of Economic Development, was 3.3% year-on-year after a decrease of 0.7% in March, a decline of 2.6% in February, and 2.7% in January. The Ministry of Economic Development at the same time notes that the annual GDP growth in April was partly due to the low base of the same month in 2022, and compared to April 2021, there was still a decline of 0.6%.
According to the statement from the Russian Ministry of Finance, the average price of Urals crude oil in January-May 2023 was $51.5 per barrel, decreasing by 1.6 times comparing to the same period last year ($83.48). In May, there was also a decline in price - by 1.48 times, to $53.34 per barrel ($78.81 a year earlier). The Urals discount to the North Sea Dated (Brent) benchmark was around 29.4%.
Employees of AvtoVAZ JSC went on a three-week downtime starting from May 29th. The automaker was forced to postpone the start date of the "corporate vacation" from July 24th to May 29th due to disruptions in the supply of auto components. Currently, attempts are being made to supply a number of parts and assemblies on the conveyor, which have been localized in Russia in recent months or are supplied by new partners from "friendly countries."
The certification of the Indian company GSM, associated with Rosneft, will be revoked. Gatik Ship Management (GSM) became a major transporter of Russian oil after the beginning of the war. The shipowners' association (Lloyd's Register of Shipping) announced that it would withdraw certificates from 21 GSM vessels, as it seeks to "facilitate compliance with sanctions regarding the trade of Russian oil."