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Institute for Economies in Transition (FI) - BOFIT Weekly

  1. The service sector and primary production were still propping up the Russian economy. Other core sectors showed signs of slowing in September. Preliminary estimates from Russia’s economy ministry suggest that Russian GDP contracted by 3.8 % in the third quarter. For the first nine months of the year, the decline was 3.5 % y-o-y.
  2. The number of new confirmed covid-19 infections in Russia has risen clearly since early September. Yesterday, the daily recorded number of new cases exceeded 17,000, while during the first wave of infection in April-May, the number of confirmed cases ranged from 10,000 to 11,000 a day. The number of registered deaths from the coronavirus has risen to new heights, and presently exceed 200 a day.
  3. Preliminary Central Bank of Russia balance-of-payments figures show that Russian earnings on exports of goods and services were down by nearly 30 % y-o-y still in the third quarter. The figure of decline was slightly smaller than in the second quarter. Revenues from exports of oil, petroleum products and natural gas were still down by almost half from what they were a year earlier. Revenues on exports of other goods, in contrast, have declined just a few percent this year overall, and were fairly close to where they were in the third quarter of 2019. Earnings on services exports have contracted by almost 40 %, especially on the collapse in tourism revenues.
  4. China’s Golden Week autumn holiday (Oct. 1–8) kicked off with National Day on October 1. For two decades now, the festivities have extended for 7 or 8 days. Golden Week is particularly important to retailers and the service sector as Chinese typically travel to destinations elsewhere in the country to celebrate.
  5. Since the conclusion of the week-long national holiday on October 8, the yuan has gained over 1 % against the euro and the dollar. On Friday (Oct. 16), one dollar bought 6.72 yuan. In August, the exchange rate was about 7. Since the end of last year, the yuan has appreciated roughly 3 % against the dollar and lost about 1 % against the euro. Much of the gain against the dollar reflects dollar weakness (the DXY dollar index has declined by 3 % since the end of 2019).