The economy continues to stumble. First estimates indicate that real GDP grew by a disappointing +0.9% y/y in Q2, only slightly up from +0.5% in Q1. Details are not available as yet. But a deceleration of retail sales growth from +1.9% y/y in Q1 to +1.5% in Q2 and +1% in July suggests that private consumption is a source of weakness. External demand is also weak. USD-denominated, nominal exports of goods and services shrank by -6% y/y in Q2. Meanwhile, the RUB lost half of the strength it had gained in H1 2019 (+10% vs. the USD) in August, after the U.S. announced at the start of the month new sanctions banning U.S. banks from taking part in the primary market for Russian sovereign Eurobonds, though the -9% fall in oil prices in August to date may have also played a role. The RUB weakening may refrain the Central Bank of Russia from further monetary easing at its next meeting in early September, after it cut its policy rate by a cumulative 50bp to 7.25% in June-July. Euler Hermes is likely to revise down its full-year GDP growth forecast to +0.8% for 2019, followed by +1.4% in 2020.
