Ukraine Latest: Russian Economy Is Seen Shrinking 2.7% in 2023
Russia’s economy is forecast to contract by 2.7% next year on the heels of the 2022 3.3% decline, before potentially expanding in 2024, according to a survey.
(Bloomberg) -- The US commitment to stand with the government in Kyiv “for as long as it takes” is the best way to “improve the prospects of a just and durable peace” and “to actually advance the prospects for meaningful diplomacy,” according to Secretary of State Antony Blinken.
Blinken — who discussed the war Friday in a call with his Chinese counterpart — said work is continuing to repair Ukraine’s energy infrastructure and bolster its air defenses, including with Patriot missiles.
Russia’s economy is forecast to contract by 2.7% next year on the heels of the 2022 3.3% decline, before potentially expanding in 2024, according to a survey of economists.
(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)
Key Developments
- Biden Targets Russian Mercenaries Accused of Ukraine Atrocities
- German Allegedly Spying for Moscow Used NSA Material, Focus Says
- Russia May Cut Daily Oil Output by 700,000 Barrels, Novak Says
- Warmth Drags European Gas to Biggest Weekly Drop Since September
- Tycoon Seeks Ukraine Expansion Despite Being Sanctioned There
On the Ground
Russian forces conducted limited counterattacks along the Kreminna-Svatove line in the east of the country and Ukrainian troops continued counteroffensive operations in the area, according to the latest report from the Washington-based Institute for the Study of War. Russian forces also mounted further attacks around Bakhmut and near Avdiivka close to Donetsk, the institute said, adding that Ukrainian partisans continued to target Russian occupation authorities. Russia struck the city of Kherson on Friday, killing two people and damaging residences and critical infrastructure, the Ukrainian prosecutor’s office said on Telegram.
(All times CET)
Ukrainian Railways Says It Restructured Eurobond Payments (1:50 p.m.)
The state-owned railway company successfully restructured $895 million in eurobond payments, CEO Alexander Kamyshin said on Twitter, calling it “the first successful SOE restructuring without state guarantees.”
The company was advised by JP Morgan and Kyiv-based Dragon Capital, Kamyshin said.
Ukraine Aims For First Sea Port Privatization (1:20 p.m.)
The Ukrainian State Property Fund is preparing to auction the Ust-Dunaisk seaport in the Odesa region in January, the agency said on its website.
The port, located at the mouth of the Danube River on the Black Sea, was blocked at the beginning of Russia’s full-scale invasion in February and resumed work in April, becoming one of the first to export Ukrainian grain.
“This will be the first sale of a seaport since Ukraine gained independence,” the agency said, adding that the starting price of the auction is expected to be $1.64 million.
Air Raid Sirens Briefly Sound in Kyiv, Much of Ukraine’s East (1:30 p.m.)
Air alarms sounded in Kyiv and in many of Ukraine’s central and eastern regions in early afternoon before being lifted without incident.
Canada to Provide Funds for Kyiv’s Power Grid (1 p.m.)
Canada will provide $115 million in revenues it collected from tariffs on Russian and Belarusian goods to help rebuild Kyiv’s power grid, said Deputy Prime Minister Chrystia Freeland.
Alleged German Spy Had Access to NSA Material: Report (1 p.m.)
A member of Germany’s BND foreign intelligence service detained this week, who allegedly spied for Russia, may have had access to information shared by the US National Security Agency and Britain’s GCHQ, Focus magazine reported, citing security sources in Berlin it didn’t identify.
Read more: German Allegedly Spying for Moscow Used NSA Material
The BND is concerned that the man, a German citizen identified only as Carsten L., may have passed some of the US and British material to Russia, the magazine said.
Power Deficit in Ukraine Shrinks: Ukrenergo (12 p.m.)
Ukraine’s power deficit narrowed slightly, though it remains significant as the transmission network has been severely damaged by Russian missile and drones attacks, grid operator Ukrenergo said on Telegram.
“Repairs at energy infrastructure facilities continue around the clock,” the company said, adding that all nine nuclear facilities are working at full capacity.
Netherlands Allocates €2.5 Billion in Additional Aid (11 a.m.)
The Dutch cabinet on Friday approved €2.5 billion ($2.7 billion) in additional aid for Ukraine next year to help pay for military equipment and reconstruction and provide support for the rule of law, human rights and war-crimes accountability.
“Ukraine can rely on the Netherlands,” Prime Minister Mark Rutte said in a tweet following a call with President Volodymyr Zelenskiy. The money comes on top of a support package worth €18 billion agreed this month by the European Union, Rutte’s government said in a statement.
Habeck Sees Stronger Germany (10:40 a.m.)
Germany has grown stronger as a nation since Russia’s invasion of Ukraine and although some mistakes were made in the government’s response they were corrected and learned from, according to Economy Minister Robert Habeck.
“I can’t promise you that 2023 will be an easier year,” Habeck said in a holiday message published on Twitter. “But I would like to say that this year we have become stronger, so strong that we can promise further support for Ukraine,” he added. “And so strong that we can approach 2023 with a certain self-confidence.”
Russian Economy Seen Shrinking 2.7% in 2023 (10:15 a.m.)
Russia’s economy will contract by 2.7% next year before returning to growth and expanding by 1.6% in 2024, according to a Bloomberg survey of 26 economists conducted Dec. 16-21.
The central bank last week delivered its strongest warning yet that the Kremlin’s call-up of men, combined with a massive exodus of Russians, is leaving the economy deprived of workers and could put pressure on inflation. Ukraine’s economy, meanwhile, is seen contracting by 33% this year and growing by 2.8% in 2023, according to a Bloomberg survey of nine economists.
Russian Stocks Head for Six Weeks of Declines (8:45 a.m.)
Russia’s benchmark MOEX Index is on track to post six straight weeks of losses, the longest such streak since 2017 as traders assess the impact of sanctions and other restrictions on the economy.
The MOEX Index fell 0.4% on Friday, led by Lukoil, Sberbank and Norilsk Nickel. That extended its weekly decline to 0.8%. The index is down around 44% this year.
Germany Helping Cut Reliance on Soviet Kit (8:30 a.m.)
Germany’s defense ministry said recent swap deals with countries including Slovakia are helping NATO partners end their reliance on aging Soviet-era military equipment.
Under the agreements, Germany replaces kit that nations supply to Ukraine with more modern materiel. Defense Minister Christine Lambrecht this week delivered the first of 15 Leopard 2 A4 battle tanks to Slovakia, with the remaining 14 to follow next year.
Oil Gains as Russia Threatens to Cut Output (7:30 a.m.)
Oil headed for a substantial weekly gain as Russia said it may cut crude production in response to the price cap imposed by the Group of Seven on its exports, highlighting risks to global supplies in the new year.
West Texas Intermediate climbed above $78 a barrel, set for a gain of more than 5% this week even as concern flared over near-term demand in China and US data reinforced prospects for more rate hikes. Russia may reduce output by 500,000 to 700,000 barrels a day in response to the cap, Deputy Prime Minister Alexander Novak said, according to the state-run Tass news service.
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