OPEC+ cuts to hit Russian external surplus into 2021

Significance

Foreign investment slowed, private capital flowed out and geopolitical risk and ruble depreciation dented foreign investors' appetite for Russian government bonds.

Impacts

• The economic recovery expected to start in the fourth quarter is likely to be undermined by an unconstrained rise in COVID-19 infections.
• Ruble weakness is contributing to inflation, though this may be temporary as disinflationary forces are strong.
• Ruble depreciation is raising the prices of imported machinery, deterring investment in productive capacity.