0656GMT//Putin to head to China for military parade; The Kremlin bans fuel exports; Dodgy internet hits profits at Russian e-scooter company
PUTIN TO CHINA: Vladimir Putin will travel to China next week for a four-day visit, his top aide Yuri Ushakov said yesterday. This will be Putin's first trip to China since May 2024. (COMMENT: Chinese Pres. Xi Jinping is Putin's most important ally, so a trip to Beijing is probably overdue. The highlight of Putin's trip is a military parade on Sept. 3 to mark the 80th anniversary of the defeat of Japan in World War II. China has now confirmed that North Korean dictator Kim Jong-un will also attend the military parade. This will be the first time that Putin, Xi and Kim will be photographed together.)
US BUSINESS IN RUSSIA: ExxonMobil, the US oil major, discussed re-joining the Sakhalin oil and gas project in Far East Russia on the sidelines of Donald Trump and Vladimir Putin's meeting in Alaska earlier this month, the Wall Street Journal reported yesterday. (COMMENT: This highlights Trump's "business first" approach to negotiations with the Kremlin to end the war in Ukraine. It also shows just how eager at least some Western companies are to get back into Russia.)
FUEL EXPORT BAN: The Russian government will ban exports of car fuel from Sept. 1 for two months. (COMMENT: Ukrainian drone attacks have dented Russian oil refining capacity by around 17%. Reports from the regions show that fuel is becoming harder to find, with motorists talking about "shortages". Videos show long queues at petrol stations in Russia's Far East. This temporary ban on fuel exports is the Kremlin's effort at trying to correct these shortages.)
POOR GDP DATA: Russia's GDP grew by just 0.4% in July compared to a year earlier, the Russian economy ministry reported on Thursday. This was lower than expected, and economists lined up to warn that Russia's war-powered economic boom was now over. (COMMENT: The economic slowdown wasn't a surprise to independent economists, but it seems to have irritated the Russian government, which has now lowered its GDP forecast for 2025 to 1.5% from 2.5%. GDP details also showed how non-war sectors of Russia's economy were suffering. Clothing production was down by 7%, furniture production was down by 12%, electronics down by 6.5% and the metals sector shrank by 10.2%.)
RUSSIAN CAR MAKER TARGETS KYRGYZSTAN: AvtoVAZ, Russia's largest car manufacturer, will invest $30m in building a car assembly plant in Kyrgyzstan. It said yesterday that the plant will open next year and produce 1,500 cars. (COMMENT: This is a clear move by AvtoVAZ to try to open up new markets for its cars. The Russian car market has collapsed because of the impact of the war in Ukraine and AvtoVAZ, the producer of the Lada, needs to find new customers. AvtoVAZ had previously ignored Kyrgyzstan, which has typically bought old cars from Europe rather than new cars from Russia, but it has been laying off workers and has started talking about asking the government for a bailout. This is a, perhaps desperate, effort to generate more sales.)
POOR INTERNET HITS E-SCOOTERS: Whoosh, a Russian electric scooter rental company, reported a 15% drop in profit for the first half of the year, partly because Russian regions have been turning off the mobile internet services to deflect Ukrainian drone attacks. (COMMENT: Whoosh is the first major Russian company to admit that the tactic of turning off mobile internet in Russia has hit sales.)
RUTUBE LAYOFFS: Rutube, the Kremlin's attempt to build a pro-war version of Youtube, has started to lay off "a significant" number of workers. (COMMENT: Rutube is owned by Gazprom-Media. It was a blunt Kremlin propaganda tool and was never particularly popular.)
NEWS MATRIX:
Confirmation that ExxonMobil has been talking to Russia about re-joining the Sakhalin oil and gas project is important as it highlights just how much emphasis Trump puts on rebuilding business links with Russia despite the war in Ukraine and sanctions.
Also important is news that the tactic of turning off mobile data across Russia to undermine Ukrainian drone attacks is now hitting company profits. Ukrainian drone attacks have been very effective at hitting Russia's economy.