Articles by Karen Kostanian CFA



Tracing a V-Shaped Recovery

After the release of the 1Q 2009 GDP growth figure of -9.5 percent year-on-year, it has become apparent that the Russian economy will not be out of the recession zone in 2H 2009, as was initially expected by both government and market consensus. To us, the main negative surprise came from consumption side, which appears to have dropped significantly. As consumption is a key element of GDP (private consumption accounts for 49 percent), we now adopt a more pessimistic view on Russian economic performance in 2009-10, downgrading our forecasts to -4.9 percent in 2009 and 1.0 percent in 2010 from -2.1 percent and 2.5 percent, respectively. We also now expect to see a return to positive GDP growth only in 2Q 2010, along with a global economic recovery and positive base effect.

Market Suffers From Lack of Catalysts

The Russian market continued its downward trend in January, reflecting global negative sentiment, low commodity prices, continuing ruble devaluation and bleak economic data.