Russia likely to stabilize, oil prices to remain key drivers

The Russian economy is expected to stabilize after five consecutive quarters of deterioration, condition upon monthly GDP figures, being in line with estimates of -1.4 pct for Q1 on year, as released by the Ministry of Economic Development. Also, price movements in the global oil market would remain the key drivers for the largest oil exporting nation.

However, GDP data released today is unlikely to paint a positive picture amid a subdued market expectation of -2.0 pct for y/y GDP rates. Capital outflows are even lower than the current account surplus, inflation fell significantly over the last months and retail sales improved sharply in March, Commerzbank reported.

Besides, the end of the ailing recession would further signal that the Russian economy is back on track, with improvements in the real economy to extend further support.

"At the end a better economic performance would make rate cuts by the CBR not necessarily less likely but at least less extensive," Commerzbank said in a research note.