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Russia sanctions affect sentiment
27 August 2014
MNI Russia Business Indicator declines 3.1 points
The MNI Russia Business Indicator declined 3.1 points to 51.5
in August from 54.6 in July as the imposition of tougher
sanctions by the EU and US hit companies' access to credit.
The Deutsche Börse Group survey revealed pressure on
firms' finances increased considerably in August as new
sanctions reduced the ability of firms to raise finance abroad.
The financial position and the availability of credit
indicators hit record lows in August, with the latter falling
below the 50 expansion/contraction line for the first time in
"This was the first survey following the downing of Malaysia
Airlines flight MH17 and the imposition of new sectoral
sanctions from the EU, the combination of which had a clear
negative impact on sentiment," said Philip Uglow, chief
economist at MNI Indicators.
In July, the MNI report suggested that companies' concerns
surrounding sanctions had begun to fade, but warned that the
downing of a Malaysia Airlines flight and the imposition of
sectoral sanctions by the EU could see sentiment hurt again.
This seems to have come to fruition in August.
The new Tier 3 sanctions have also hit Russian exporters with
export orders falling back into contraction to the lowest since
May, having hit a five month high in July.
While output managed to hold up, albeit at a reasonably low
level, a fall in new orders to the lowest since December 2013
suggests this could be short-lived.
Analytics company FICO and the National Bureau of Credit
Histories (NBKI), Russia's leading credit bureau, have also
confirmed a fall Russian borrowers' credit health in recent
The FICO Credit Health Index had reached 98 points on July 1,
the lowest level since the Index was initiated in 2008. The
previous low point (100 points) was initiated in July
The FICO Credit Health Index measures Russia's overall credit
health, based on the percentage of consumer loans and credit
cards reported to NBKI as delinquent by more than 60
In July 2014, 12.2 percent of Russian credit accounts were
delinquent, compared with 10.07 percent in January 2014, and
just 7.05 percent in January 2012, when the index reached its