15/8/15: EEU: Kyrgyzstan the latest addition

On August 12, Kyrgyzstan became a member of the Eurasian Economic Union (EEU), joining Russia, Kazakhstan, Belarus and Armenia. Kyrgyzstan is the least developed of the EEU economies, relatively proximate only to Armenia in the group.

16/1/2015: Moody's expect Russian GDP growth of -5.5% in 2015

Moody’s Investors Service, expects Russian GDP to post a decline of 5.5 percent in 2015.

The forecast comes via Moody's note on Armenia in which the agency downgraded Armenian debt to Ba3 from Ba2 and cut outlook from stable to negative.

Per Moody's: "The key drivers for the downgrade are the following:

1) Armenia's increased external vulnerability due to declining remittances from Russia, an uncertain outlook for foreign direct investment (FDI), an elevated susceptibility to exchange rate volatility, and expected pressure on foreign exchange (FX) reserves;

2) The country's impaired growth outlook, compounded by negative growth spillovers from Russia, weak investment activity, and constraints on trade with countries outside the Eurasian Economic Union (EEU) that are expected from Armenia's recent EEU accession."

Moody's note: https://www.moodys.com/research/Moodys-downgrades-Armenias-government-bond-rating-to-Ba3-from-Ba2--PR_316326

According to Moody's "Remittances represent about 15% of GDP, with over 90% of the total stemming from Russia."

More on the remittances from Russia to other CIS and former USSR states here: http://trueeconomics.blogspot.ie/2015/01/1312015-remittances-from-russia-big.html

4/1/2015: Eurasian Economic Union: Extra "E" & Less of "U"

In other 'Russia et al' news, Eurasian Economic Union came into force this week. This includes original founders (2010): Russia, Belarus and Kazakhstan, plus Armenia which joined in October 2014. In May, Kyrgyzstan is expected to join, having signed formal agreement last month.

Here's a summary of the EEU economic position, based on IMF data and forecasts.

The EEU objective is to increase economic integration and coordination within the sub-set of CIS states. Like the EU, it also sets a target of achieving integrated energy and capital markets.

In 2012, the EEU founding states agreed to implement free mobility of labour and capital, as well as free movement of goods and services. While there were transitionary periods set, integration to-date has been relatively limited and in recent months it came under increasing pressure, primarily driven by Belarus, but also, to a lesser extent, by tougher-talking Kazakhstan.

Ruble crisis certainly not making things easier. In recent weeks, there have been renewed border inspections between Russia and Belarus, and the latter demanded that trade with Russia be settled in foreign currency, not Ruble.