Russian Economy General News: #1

Russia is investing huge money in agronomy and industry as well as transport, new power plants, etc. You all remember Russia in times of USSR and in the nineties have to import food, now Russia is one if the largest exporters and in coming years will become number one food exporter. With food prices rising, Russia will soon make more money with food and clean water, than with oil and gas.

It's true, that for now Russian industry is more oriented in domestic consumption, but with production growing Russia will become important goods exporter. If you have to choose between chinese or russian product, russian will be of better quality. West itself have less and less industry, because they move it outside like in China, India, Bangladesh, etc. West have to import products and Russia will sell them. Also there are other markets, not only EU and US.

Russia doesn't need to worry, there are more than 7 billion of people and they all need to eat and drink.

EBRD stated that Russia has failed in its drive to diversify its economy, is this case true or not?

TheRealist don't even attempt to subliminally suggest that mine was an attack aimed only toward the messengers (naturally those on the payroll or directly working for COMPETITORS, with very clear vested interests ....for not say a very long tradition at low level counter-will "bashing" propaganda ....intended to promote THERIS INTERSTS) instead that to the message.

Percentage in Russian Federation's GDP of mining and quarrying related activities represent a relatively low share of total (directly from Rosstat)


http://www.gks.ru/bgd/regl/b12_06/IssWWW.exe/Stg/d05/04-01.doc


It is significantly lower than the average for resource-rich countries (and Russia is ,by a long margin, the most resource-rich Nation at world , moreover, with an immense amount of resources ,critical for industrial sector of the future world, still to be exploited or even only explored ).


The segment ,instead, where oil and gas revenues truly represent the lion share is in tradable export goods, but only because other products was penalized, at least since less than year ago, by very damaging terms of exchange and absurd barriers to investements ,in respect to the corresponding products of other Nations in the International Market.

That is ,in particular the product, of a very attentive politics, by part of the greater players in the world scene, of economic insulation and measures aimed at slow-down Russian grow for the longer period possible (counter-will PR in public media is also part of that approach).
That is clearly evident with the case of Russian Federation accession to the WTO (up to the last year Russia was the only major economy at world out of it ) requiring..... OVER 18 YEARS OF NEGOTIATIONS to be achieved !!!!!




Therefore no drive to "diversify its economy" exist but only to diversify tradable not-energy-related goods at advantageous terms in the world market and here ,within four years you will see the effects of an economy competing finally at equal terms with European ,South Asian and North/South American finished products....but with an huge percentage of its GDP completely debt-free, an incredibly advanced scientifical and technical sector and an enormous cash reseve for effectuate advantageous domestic or abroad investements (all reasons for attempting to retard ,for what possible, in particular Russian grow among that of BRICS nations).

I wonder what kind of exports russia will concentrate upon after all its oil and natural gas is used up which could create an economic catastrophe. Looking on the bright side, no more major sources of pollution.

KomissarBojanchev wrote:I wonder what kind of exports russia will concentrate upon after all its oil and natural gas is used up which could create an economic catastrophe. Looking on the bright side, no more major sources of pollution.

You got to be kidding. Only in Syria Russia had 20bin contracted construction, telecommunication and other work.

Besides oil and gas - which will NOT end up in 2020 or any time near Russia has huge other potential mindstorm has being talking about.

At this moment Rosatom has contracted 70bin$ until 2020 and counting.



medo has being saying about food and water and he was right. If you see year on year production Russia is increasing its food production

on rapid scale. You must understand that in all aspect of industry, agriculture, entertainment, etc Russia is making rapid progress.

KomissarBojanchev wrote:I wonder what kind of exports russia will concentrate upon after all its oil and natural gas is used up which could create an economic catastrophe. Looking on the bright side, no more major sources of pollution.

IMO high tech goods and services; from weapons to electronics to vehicles to heavy equipment, etc.. All these require widespread and intensive application of automation technologies which require huge technical expertise and experience on part of the Russians and massive capital too. Some of the technical expertise and experience is there in Russia, while for others, just go to Japan and /or Germany with an assload of money(either metric or King's assload will do) and have them teach it to you, I'm sure Russia could learn such things quickly and integrate them in their industry.
Funny, it is the Weast that wants and needs Russia to become a resource-dependent nation and now they seemingly "want" the opposite. I do hope that they are sincere with this one, they have been fighting tooth and nail just to hamper Russia's growth as a nation for the most part of 18th century until today and such old habits don't die that easily as they put sanctions on a whim. They better not piss off a bear coming from a deep sleep, the bear that they lulled ever so hard and long while they steal from it.

Mindstorm wrote:

EBRD stated that Russia has failed in its drive to diversify its economy, is this case true or not?

TheRealist don't even attempt to subliminally suggest that mine was an attack aimed only toward the messengers (naturally those on the payroll or directly working for COMPETITORS, with very clear vested interests ....for not say a very long tradition at low level counter-will "bashing" propaganda ....intended to promote THERIS INTERSTS) instead that to the message.

Percentage in Russian Federation's GDP of mining and quarrying related activities represent a relatively low share of total (directly from Rosstat)


http://www.gks.ru/bgd/regl/b12_06/IssWWW.exe/Stg/d05/04-01.doc


It is significantly lower than the average for resource-rich countries (and Russia is ,by a long margin, the most resource-rich Nation at world , moreover, with an immense amount of resources ,critical for industrial sector of the future world, still to be exploited or even only explored ).


The segment ,instead, where oil and gas revenues truly represent the lion share is in tradable export goods, but only because other products was penalized, at least since less than year ago, by very damaging terms of exchange and absurd barriers to investements ,in respect to the corresponding products of other Nations in the International Market.

That is ,in particular the product, of a very attentive politics, by part of the greater players in the world scene, of economic insulation and measures aimed at slow-down Russian grow for the longer period possible (counter-will PR in public media is also part of that approach).
That is clearly evident with the case of Russian Federation accession to the WTO (up to the last year Russia was the only major economy at world out of it ) requiring..... OVER 18 YEARS OF NEGOTIATIONS to be achieved !!!!!




Therefore no drive to "diversify its economy" exist but only to diversify tradable not-energy-related goods at advantageous terms in the world market and here ,within four years you will see the effects of an economy competing finally at equal terms with European ,South Asian and North/South American finished products....but with an huge percentage of its GDP completely debt-free, an incredibly advanced scientifical and technical sector and an enormous cash reseve for effectuate advantageous domestic or abroad investements (all reasons for attempting to retard ,for what possible, in particular Russian grow among that of BRICS nations).

I do believe that Russia better off economically and much more better set to become diversify compared to other resource base economies. I see your point Mindstorm.

What very many people miss when analysing Russia's economy as natural-resource exporting, or natural-resource dependent - is that yes indeed; Russia, as the world's most naturally rich country - does indeed base its economy off its own resources and land and you could very well say that its 'natural-resource dependent'. But the figures tell far from the whole story - a great proportion of such exports - are processed natural resources or value-added industries that require raw materials extraction in order to function.

"Oil and Gas" are in fact thousands of kilometers of pipelines (creating massive orders for Russia's metallurgical enterprises), dozens of refineries with tens thousands of educated experts, a whole fleet of specialised ships and naval constructions (big boost to Russian shipbuilding and maritime engineering firms), countless gas power-plants all over the country with many qualified workers & professionals, production of various high-octane fuels such as Kerosene (vital for defense and civil aviation), not to mention one of the fuels for Russia's considerable chemicals industry; especially polymer & plastics production of many various kinds.

"Coal and Metal ores" are the basis for Russia's huge steel mills, rolled steel, sheet metal and all kinds of specialized constructions of sizes from small details to ship hulls. Shipbuilding, military-industrial, automobiles, aircraft & space materials, new railway tracks are all dependent on them. Exotic materials too are based off such mines and extraction; titanium production (Boeing buys titanium wings and components from the Urals), composites, production rare metal alloys that are made only in a handful of countries in the world..

"Timber" is increasingly not exported raw (there have even been tarrifs introduced in an attempt to reduce raw timber exports), but fed into Russia's rapidly growing wood-processing industries; making cardboard, wood panels & boards, paper, construction parts & materials, chemicals, furniture-production & wood-crafting, even wood pellets (used as biofuels).

"Grains, Cereals, Fish & Livestock" - all steadily become the basis of ever more-higher value industries & produce. Processed-foods; dairy-products, meats, juices, yogurts, etc... are rapidly expanding. Agricultural production is growing fast, but the bigger story is the diversification within all these agricultural sectors; in livestock - turkey, rabbit, various new cattle breeds and other exotic animals that were never traditional in Russia are now being bred in larger quantities. Aqua-farms are being set-up & seafood production is diversifying into more exotic territory. Experiments with growing various types of new grains and vegetables are taking place in Russia's agricultural regions; new exotic crops are being grown such as tea, wine production is being revived, large, industrial-size greenhouses for growing vegetables all seasons are springing up in many parts of the country;

"Uranium" is of course - nuclear power, defense industry, science, etc... And the same goes for all sorts of exotic elements and compounds that are found in Russia but in few other places. Even diamonds mined in Russia are often of industrial-grade and used for production purposes in order to create higher-value products.

I could go and on but I have to go back to work. Point is - Russia can't live without its resources and nor should it. The key thing is to continue weaving off not natural resource dependence, but the seductive dependence on simple resource extraction and export of unprocessed resources. Russia must keep moving towards higher-value processing, adding more and more steps to the chain until the country's economy can claim full-cycle production of such things as the most complicated electronics, high-tech goods, advanced materials, etc... with the ability to fulfill each step along the way (provided its profitable) - from the extraction of silicon, to the production of circuit boards, to the programming of operating systems for ready devices. Concurrently - infastructure must continue to receive vast investment - it's the only way to ensure that all these production chains will be cost-effective and profitable; Russia is a vast country and transport is rarely cheap - but with the right amount of investment it could well turn out cheaper and potentially profitable to produce a lot of this stuff domestically and export ready goods, rather than importing materials and components.

Makes an interesting read

FORBES: Why Russia's Economy Isn't Going To Collapse

"Oil and Gas" are in fact thousands of kilometers of pipelines (creating massive orders for Russia's metallurgical enterprises), dozens of refineries with tens thousands of educated experts, a whole fleet of specialised ships and naval constructions (big boost to Russian shipbuilding and maritime engineering firms), countless gas power-plants all over the country with many qualified workers & professionals, production of various high-octane fuels such as Kerosene (vital for defense and civil aviation), not to mention one of the fuels for Russia's considerable chemicals industry; especially polymer & plastics production of many various kinds.

Arent russian industrial plants very old and cause massive amounts of pollution that no one is caring to fix?

KomissarBojanchev wrote:

"Oil and Gas" are in fact thousands of kilometers of pipelines (creating massive orders for Russia's metallurgical enterprises), dozens of refineries with tens thousands of educated experts, a whole fleet of specialised ships and naval constructions (big boost to Russian shipbuilding and maritime engineering firms), countless gas power-plants all over the country with many qualified workers & professionals, production of various high-octane fuels such as Kerosene (vital for defense and civil aviation), not to mention one of the fuels for Russia's considerable chemicals industry; especially polymer & plastics production of many various kinds.

Arent russian industrial plants very old and cause massive amounts of pollution that no one is caring to fix?

Most of them aren't that old (70s, 80s) or have been modernized in recent years. I'm sure there are some lemons though still around here or there.

A couple of articles from a pro-Russian Lithuanian (yes, apparently they exist as well )

Why Russia's Economy Isn't Going To Collapse
http://www.forbes.com/sites/markadomanis/2013/01/07/why-russias-economy-isnt-going-to-collapse/

A Further Clarification on Russian Capital Flight from Alexander Ivlev, Managing Partner for Ernst and Young Russia
http://www.forbes.com/sites/markadomanis/2013/01/03/a-further-clarification-on-russian-capital-flight-from-alexander-ivlev-managing-partner-for-ernst-and-young-russia/

"Comfortable" statistics or some positive statistical facts about Russia in the years 2000-2011

T

he following facts suggest the same source, but in a different context:

meat production increased from 1,200 tons to 4,200 tons;
manufacture of footwear from 33 million pairs to 111 million pairs;
Refinery - from 173 million tons to 258 million tons;
gasoline - from 27 million tons to 37 million tons;
finished rolled steel - from 47 to 60 million tons;
steam turbines from 1.3 million to 4.3 kW;
freezers from 1.3 million to 4.1 million;
railway freight wagons with 4 thousand to 63 thousand units.
potato yield increased from 105 to 148 centners per ha;
productivity of vegetables grown from 143 to 208 quintals per hectare;
yield of grain and leguminous crops grown from 15.6 to 22.4 centners per hectare;
gross harvest of sugar beets grown 14 to 48 million tons;
gross yield of sunflower from 3.9 to 9.7 million tons;

commissioning of dwellings increased 30 to 62 million m a year;

Clearly, this is only part of one side of the coin.

But, the above facts are collected specifically to combat those who "prefer to see" just all in black.

The positive trade balance of Russia has grown for 11 months in 2012 by 2.3 percent to 193.4 billion dollars

MOSCOW, January 14. / ITAR-TASS /. The positive trade balance in January-November 2012 amounted to 193.4 billion dollars, 4.4 billion more than the year before. On this day informs the FCS.

In the trade with foreign countries balance was equal to 159.6 billion dollars / increase of $ 1.3 billion / CIS countries - 33.8 billion dollars / increase of $ 3.1 billion /.

According to customs statistics, in January-November 2012 Russia's foreign trade amounted to 761.6 billion dollars, compared to January-November 2011 increased by 2.5 percent, including those with foreign countries - 653.9 billion dollars, with CIS - 107.7 billion.

$193 Billion of trade Surplus in favour of Russia is quite good when Global Economy is not in good shape.

Expect Western Economist to cry on this predicting how in 2013 Russian Economy will go slow and oil will fall ....Too bad for them though

Austin wrote:$193 Billion of trade Surplus in favour of Russia is quite good when Global Economy is not in good shape.

Expect Western Economist to cry on this predicting how in 2013 Russian Economy will go slow and oil will fall ....Too bad for them though

Im sure they will find a way to distort those numbers or will simply not report at all until something nasty pops out

US to Produce More Fuel Than Russia This Year – BP

MOSCOW, January 17 (RIA Novosti) – The United States is expected to surpass Russia and Saudi Arabia in 2013 as the world’s largest producer of crude oil and biofuels, British oil major BP said in its latest report published on Thursday.

The United States will overtake both Russia and Saudi Arabia in 2013 in liquids production due to rising production of shale oil and biofuels, but also due to expected OPEC production cuts, the forecast said.

Russia will likely pass Saudi Arabia for the second place in 2013 and hold this position until 2023. Saudi Arabia will regain the top oil producer slot by 2027.

“The US, Saudi Arabia, and Russia will supply over a third of global liquids,” the BP forecast said.

Russia will remain the world’s largest energy exporter by 2030, with increases in exports of all fossil fuels. Net energy exports will rise by 25 percent in volume terms.

Adjusting for expected economic growth, Russia is likely to remain significantly less dependent on energy exports than Saudi Arabia, the report said.

Finance Minister talks on Russia's financial prospects in 2013

Russia's GDP growth has a vision from 2 trillion to $ 3 trillion

DAVOS, January 23. / ITAR-TASS /. Russia's GDP growth has a vision from 2 trillion to $ 3 trillion. This was stated in an interview with RT General Director of the Russian Direct Investment Fund / RFPI / Kirill Dmitriev.

Speaking about the prospects for Russian GDP growth, he noted that "many people do not know that for the last five years, the Russian middle class has increased by 3 times, or, for example, that over the last 12 years, GDP per capita increased by 10 times. World few countries that have shown such growth. The Russian GDP has prospects to grow from $ 2 trillion to $ 3 trillion. "

Commenting on the possible scenarios for Russia's development, announced at the World Economic Forum in Davos, Dmitriev said that "in our present scenario is quite pessimistic, but we believe that Russia has all the prospects for economic growth. And we consider presented scenarios in terms of what Russia should try to avoid in the future. "

Furthermore, Dmitriev noted the importance of the regional dimension of the Russian economy. "In Russia, there is a very successful regions - Kaluga Region, for example, has attracted many foreign investors. This area, we can say, ten times more effective than other regions. So we believe that the work that different regions of Russia are done to attract investment is very important. But our private equity fund for its part, too, is investing in some key areas - such as in the construction of theaters, we also invest in health, as Russian citizens should have access to quality health care. "

Russian Finance Ministry saves for a rainy day

With yet another wave of economic crisis predicted, Russia is preparing and filling up its Reserve Fund.

Russia’s Finance Ministry is due to transfer a $30 billion surplus of gas and oil revenues to the country’s Reserve Fund following the results of budget performance in 2012. Fresh inflow will increase the reserve by about a half to bring it to $93 billion in total.

The Fund was better prepared for the previous economic crisis. In the autumn of 2008 it was at its maximum level of $140 billion. In the following years the account was cut almost 6 times and reached its lowest level of $25 billion in 2010, as the government used almost $130 billion to covering budget spending. Over the last couple years the oil and gas surplus made up for the holes and by 2013 the reserve had $63 billion on account.

Provisions from oil and gas surplus will keep flowing into the Reserve until it reaches 7% of GDP. Russia’s Finance Ministry expects it to reach that point by 2017.

Does anyone have Russia economic data for 2012 and 2013 predictions.

Viktor wrote:Does anyone have Russia economic data for 2012 and 2013 predictions.

Even I am looking for comprehensive data but from off my head

2012

Growth : 3.5 % of GDP
Budget Deficit : None
Inflation : 5-6 %

2013 Prediction:

Growth : 4 % of GDP
Inflation: 6 %

The Total Reserve Fund and NAtional Wealth fund combined has huge money.

If 2015 projection is correct it will grow to a total of $250 billion ( 8 trn roubles )


The only way Russian Economy keeps growing is to ensure it grows 5 % of GDP on an average , for that it needs deep structural reforms , Zero Reliance on Oil Money to balance the budget , Inflation to 2-3 % and hopefully Oil Staying above $100-110 for Ural Blend.

That way Rouble will become reserve currency in CIS region and Eurosec integration will be befecial.