Russian Economy General News: #1

It isn't going to get much better with the horrid political system we have either.

Thankfully the business I am in, 2 % gain or loss makes little difference. Phew!

Its a bad thing because it is even lower than the official revised estimate of the government which was lowered to 1.8 %

So the prediction itself has been proven wrong.

TR1 wrote:It isn't going to get much better with the horrid political system we have either.

Thankfully the business I am in, 2 % gain or loss makes little difference. Phew!

To most, it wont effext but government spending. It has a better a better chance changing under current government as they will want to do whatever they can to make the masses happy so they can continue with having power, and as well, so they can have more for themselves if they are stealing. Problem with predictions Austin, is that the prediction is created based upon either high or low hopes and some vague numbers. Ultimately, one wont tell till it happens, hence why numbers can be different than prediction.

But hopefully, they further push the privatization of many low key industries, try to diversify utilities and seek more investments into R&D as well as institutions whom will push thagt product to the market.

That being said, apparently US gdp for last quarter grew by 2% even though they are not producing anything else new.

Heed to warning , read it in full

Kudrin: Russia urgently needs to change its economic policies

Austin wrote:Heed to warning , read it in full

Kudrin: Russia urgently needs to change its economic policies

Sorry Austin, but repeating things from Kudrin isnt the best and wont make you sound like you are right. Anyone with half a mind wond regard his economic policies as genious. As others have said. So get off the Kurdin train already, its annoying.

If anytging, its his policies of lack of investing or even regulating the banks is what is causing the issues now, after all these years. If he did what he is so called preaching now, then, Russia wouldnt be stagnating. Instead, it would be flourishing more. Now they are forced to regulate banks now as many banks in Russia are laundering money and out right stealing it, and they are forced in the last year or two, pumping billions to the market hooing all their investing in new enterprises will work out.

If they did it when he was economics minister, then they wouldnt be rushing investments as they are now. He is one of many to blame for this now. Now it will take time to get back to growing, so stagnation may happen for a while. At least until their investments start to churn profits. As well, they got to improve protectionism laws in russia to meet demand as well as to prevent jobs from going belly up from foreign pressure.

Turn Around from Ukraine  

Ukraine Ditches Plans for EU Deal, Turns to Russia

"Kudrin said this type of economic growth fails to stimulate productivity and kills all incentives for introducing new technology and increasing product quality."

Regarding new technologies and product quality....very true in some industries that I have a little experience with.
Corruption sanctioned by local and federal politicians goes hand in hand with this.

Austin wrote:Its a bad thing because it is even lower than the official revised estimate of the government which was lowered to 1.8 %

So the prediction itself has been proven wrong.

i completely agree , as i was warning too , russian economy is not in such a good state. Stagnation would be deadly for russia ,not only it wouldnt reach developed countries but developing ones would overtake it definatelly...

Rpg type 7v wrote:

Austin wrote:Its a bad thing because it is even lower than the official revised estimate of the government which was lowered to 1.8 %

So the prediction itself has been proven wrong.

i completely agree , as i was warning too , russian economy is not in such a good state. Stagnation would be deadly for russia ,not only it wouldnt reach developed countries but developing ones would overtake it definatelly...

Most developing countries economy is sinking or stagnating. Indias growth dropped as well. The people at fault are either in power or are talking a lot (Kurdin). He is right in some cases, but to be blamed as well.

Stagnation wouldnt be deadly though. Japan has had stagnation for 20 years. It is how yhe budget will be dealt with and what percautions they will take. Stagnation means no growth. They are growing but very slow now. Quick method would be a economics package. But inflation would rise. Or fight inflation and as you said RPG, reduce energy consumption.

If the economy decided to reverse and go negative like in 2008/2009, then there is a real problem. As mentioned, they need to change economic policy to at least bring in incentives for developing new technologies.

Russia’s energy saving measures may boost GDP by extra 2-3%

MOSCOW, November 21. /ITAR-TASS/. Energy saving measures may ensure an additional growth of the GDP in Russia by 2-3%, Energy Minister Alexander Novak told reporters on Thursday.

“Those measures that we are considering to boost energy efficiency may ensure an additional growth of the GDP from 2% to 3%. These are expert assessments,” he said, adding that Russia’s energy efficiency strategy would be actualised until 2035 and a new strategy would be ready during the first six months of 2014.

Earlier, Deputy Energy Minister Kirill Molodtsov told the Gas of Russia forum that Energy conservation measures will help Russia save 160 billion cubic metres of gas a year, or almost a third of gas consumption in the country.The mentioned measures will allow to save about 200 million of equivalent fuel by 2020, which is equal to 20% of energy consumed in 2012, Itar-Tass quoted the director of the Energy Ministry’s department of energy efficiency, Alexander Mitreikin, as saying November 19.

Russian titanium producer, Boeing set to build new facility in Urals

MOSCOW, November 18,/ITAR-TASS/. A joint venture (JV) of Russia’s titanium producer VSMPO-AVISMA, part of the state corporation Rostec and Boeing plan to increase the output of stamping parts for the US aircraft manufacturer, Rostec’s press office reported.

A memorandum of understanding signed Monday stipulates the construction of a new facility in the Sverdlovsk Region in Russia’s Urals to process stamping components for Boeing’s cutting-edge passenger liners. The facility will be located not far from the enterprise’s already existing plant in the special economic zone called Titanium Valley.

“This will help double the production capacity of the joint venture Urals Boeing Manufacturing (UBM) by 2016,” Rostec reported.

The new facility will employ about 100 highly skilled engineers. Investments have not been revealed.

Central Bank revokes license of Master Bank

ITAR-TASS/Sergei Shakhidzhanyan

MOSCOW, November 20. /ITAR-TASS/. Central Bank of Russia has revoked the license of Master Bank, which is among the country's 100 large banks with deposits worth 46.82 billion rubles as of November 1, 2013.

The CBR moved to recall the license citing Master Bank's large-scale suspicious operations and the failure to abide by the federal laws on banking and combating money laundering and terrorism. "The revocation of the license is pursuant to the CBR's policy to remove from the market of banking serves the loan institutions involved in illegal activates, violating banking legislation, distorting information about their financial position and creating a real threat to the depositors and creditors' interests," the regulator said in a press release on Wednesday.

Mineral resources account for 160 billion rubles of Russian budget revenue in 2013

ITAR-TASS/Alexei Nikolsky

MOSCOW, November 18, /ITAR-TASS/. The use of subsurface resources this year has generated four times more budget revenues than expected, Russian Minister of Natural Resources and Environment Sergey Donskoy told a meeting of the Environmental Public Council on Monday.

“Since the beginning of the year, the federal budget has received 160 billion rubles for the use of mineral resources. Initially, budget revenues were estimated at 42 billion rubles. Thus, we managed to make this figure almost four times higher within eleven months,” Donskoy said, adding that the highest income was produced by one-time payments for the use of hydrocarbons - more than 148 billion rubles.

Also looks like Russia is getting ready to sell off property/realistate as soon as Olympics are over, as they are negotiating with investors over it. Probably a smart idea.

As well, housing market once again increased in Russia.

What is funny though, regarding what Kurdin said, and this is at TR1, could you explain to me how they (politics) is curbing an industry in advancing technologies and improving efficiency? For instance a ceramics plant a few years ago upgraded the facility to automation, and reduced workforce from 700 to around 100 and improved production. How would such a move be prevented for other enterprises? Force of enterprises to keep workers? Or is it due to lack of obtaining credit? Last I heard, credit for enterprises was through the roof and many industries owed a lot of money. Wasn't there are push recently for enterprises to modernize facilities to improve efficiency? How is all of this getting curbed? By sounds of it, it is more like enterprises are not willing to upgrade facilities as it costs money and they rather pocket more of it.

I find the whole corruption thing is really a two to tango. Avtovaz upgrade their facilities and production line, changed management and now they are successful. Kinda pathetic that Avtovaz was able to do that after getting new management, while others cannot.

They really need to seek more foreign management. South Korea seems to be one of the best, and thus it should be in Russia's interests to seek even more south korean investment in the domestic manufacturing and productions. Or more French companies as well. Hell, maybe get AMD or Intel to open up a plant in Russia, cause so far, only real push for Russian electronics is the government, and it is them doing the investing. Private enterprises in Russia? Not so much.

Nice chunk of money  

Foreign Investment Over Three Quarters in Russia Hits $132Bln

The Medvedev as PM is a liability for Russia , He was no good PResident either.

Just kick him out and get in Kudrin as PM .....he will do a far better job then the iPOD guy Medvedev.

Austin wrote:The Medvedev as PM is a liability for Russia , He was no good PResident either.

Just kick him out and get in Kudrin as PM .....he will do a far better job then the iPOD guy Medvedev.

You think Medvedev is anything but a unit in the United Russia machine?

Any fault of his is fault of that shitstain of a party.

Medvedev is probably there because he is loyal to Putin more than Party.

Kudrin prefers to call Spade a Spade and Shit a Shit.

I hope Putin smells the Coffee or Shit and knows the Economy is not doing well and even according to their own forecast it wont grow 2.5 % for next couple of years over the projected 4 %

Things dont look bad at the moment as Oil Price is High and the Gravy Train is moving smoothly.

I hope Putin does not wait till Shit Hits the Roof and right now I see Kudrin as the right man for PM job

TR1 wrote:

Austin wrote:The Medvedev as PM is a liability for Russia , He was no good PResident either.

Just kick him out and get in Kudrin as PM .....he will do a far better job then the iPOD guy Medvedev.

You think Medvedev is anything but a unit in the United Russia machine?

Any fault of his is fault of that shitstain of a party.

A man in his position is in a position to do a great many things.

Let's not start pretending that Putin runs all of Russia all by himself and that all ideas come from him. He delegates power to his cabinet, to his Prime Minister, to the Duma, etc... so they all vested in them a certain degree of power.

And Medvedev isn't using any of it. He's just standing there like a dope and making the occasional speech about innovation, reforms and so forth.

Austin wrote:Medvedev is probably there because he is loyal to Putin more than Party.

Kudrin prefers to call Spade a Spade and Shit a  Shit.

I hope Putin smells the Coffee or Shit and knows the Economy is not doing well and even according to their own forecast it wont grow 2.5 % for next couple of years over the projected 4 %

Things dont look bad at the moment as Oil Price is High and the Gravy Train is moving smoothly.

I hope Putin does not wait till Shit Hits the Roof and right now I see Kudrin as the right man for PM job

I personally think that it is a fault of the entire political system as a whole, and maybe even just Russia altogether (Russia and most of Eastern Europe).  Corruption has been a thing throughout history, prior to Putin or the USSR.  To say 1 man rules it all, is a joke.  I honestly believe others rule as well.  Same goes for USA and almost every country.  To pinpoint the blame on one person, isn't quite right.  You need to point the fingers at everyone, as the government is a reflection of the people.

People will complain about current government being bad, but what are the alternatives?  Communists? Liberals who are financed by foreign entities?  What then?  It seems that the closest party that is willing to do anything, even if it is horrific inefficient and only happens when shit hits the fan, is the current party United Russia.  I wouldn't trust communists or Liberals into party, as I would not trust ultra conservatives and or just conservatives.  Even private enterprises are looking for ways to screw people over in various cases.

The other question is: What are they supposed to do?  What are the options to fix this issue?  I gave ideas, and the same ideas over and over again, but I could very well be wrong.  What is there to invest in?  Kurdin isn't a man of wisdom as the guy was an idiot when he was finance minister.  Only difference is, he is outspoken compared to others.  What if they get Kurdin in power?  Would he actually change the system?  Or would he simply sit on the money like he did before, and expect everything to blow over?  Investments are happening like crazy, as I have pointed out in the other thread, and you cant deny it as you have also been in that thread multiple times.  I fear that you simply want to read only what fits your agenda, and nothing else.  Simple fact is, investments are happening, things are being pushed to be done.  But what has that shown us?  That the system was frail to begin with?  That the investments are not working?  That it is going to take longer to gain anything from the investments?

Things should have changed years ago.  When Kurdin was Finance minister.  It seems that major investment projects really started to take flight over around the last years of Kurdin, heck, even now major investments are happening compared to when Kurdin was in.  Out of all the Technoparks being built, only 3 of them are completed or near completed, that is 3 out of 11 of them (with a potential 2 - 3 more).  Then there is Titanium Valley, which isn't even close to completion yet.  There is industrial parks and Skolkovo, which are not finished either.  It is going to take years.  And as Khathi said in another thread, a lot of money has been diverted to the building of Sochi for the Olympics, which is a MASSIVE investment beyond what Kurdin wanted.  Yes some of that is stolen, or heavily over inflated, but it is still investments.  Now they are looking for foreign investors to buy up property, which is happening.

I know Austin, you keep saying things like making goods like Blenders or whatever.  But you need to understand, that here in Canada we have tried this and failed, as the market is heavily over inflated with cheap crap from India and China.  No one is willing to spend $100 on a good blender, and would rather spend $30 - $50 for a cheap one that may last a couple of years, made in China.  Same goes for Russia.  What will they accomplish?  Unless they can simply force sell their stuff for cheap, and to make sales in volumes, and to automate the enterprise so the barely have to pay employees, then that is the only way they can actually accomplish in such a field.

What is it that Russia builds already?  Well, heavy industrial equipment is a major one.  Be it military or civillian.  They make semiconductors, mostly for domestic use though.  They make refrigeration units for household and industrial. They make automobiles of various types, and sell to various nations. They build building materials, etc.  The list just goes on.

India has a similar semiconductors industry as Russia, maybe even behind as Russia produces both x86 microprocessors, SPARC, MISP, and ARM, while India only does SPARC v9 I believe.  Yet their economy is growing, but, even at a slower rate than before (3% and dropping).  And look at them, they produce nearly everything too.  It all could be a reflection of the world economy.  Whom is willing to spend what.  One thing that is becoming popular in many European and just Western countries, is domestic consumption and domestic production.  Many enterprises are leaving China to go build back in USA cause with Automation, it is cheaper.  This is a reflection where cheaper economies like Russia and India, may not be needed anymore.  Add to that, there is a potential housing bubble to hit India as well, so things can get worst for that country, while Russia just dealt with what could have lead to a housing bubble through Sberbank,

Reason why Russia is a resource nation is same as Canada, but Canada is worst off regarding this: We simply have the resources, cheap to extract, and cheap to transport.  Thus, it makes it look like we are dependant on it, but simply, its easy money.  Thing is, Russia has more manufacturing in all sectors than in Canada.  Only one were we may be ahead in is building cell phones, and Blackberry is continuously going bankrupt.

Western countries have a lot of their wealth, from thanks to banking sectors and inflating their way out of trouble.  Countries like UK and Italy, are pretty much either Banking Hubs or Fashion hubs.  Outside of that, there is very little in terms of development.  Yet UK, seems to be doing quite well.  Wonder why that it?

Austin; What makes you think Kurdin is the right man for the job?  He was at the position to make changes to Financing for a decade plus 1 year.  He didn't do crap all.  Like another member mentioned on here, he sat on the money and made no investments.  Is it because he is outspoken? Navalny is Outspoken, but just as bad too.  Does that make it a good candidate?

This is me just shooting in the dark here, but here is my guess:

My best bet is, if Russia invested in a concept like North America's Autopact, but made it for nearly every sector of the economy (Sell a certain amount per year of said goods in Russia, it needs to be built in Russia), then that means it would force companies to invest in development in said country. As well, continue for domestic protectionism and consumption, while reducing energy consumption and increase consumption of other goods (industrial and home) using semiconductors made in Russia (good example is Ministry of Industry and Trade has invested in the development through MCST for Elbrus 4C 8 core x86 processor). Maybe regulate the banks and the market. Having a free market just lead to the problem that many countries in the west, Canada included, is facing.

Vsepropalschikam interesting. Russia's GDP grew as from 1999 to 2012

I am still keeping an eye on Multiclet, and hopefully will hear of something from them soon regarding their products on industrial equipment. Last I heard, they got a contract to make microprocessors for satellites.

1350 new civilian ships by 2020  

Russia approves shipbuilding program

I bet they would not even make half of those number by 2020 , unless they count small fishing trawler as part of the program

Austin wrote:I bet they would not even make half of those number by 2020 , unless they count small fishing trawler as part of the program

I dont know what they count and what dont and how many ships will they build up to 2020 but it is very important to have a plan. And Russians have plan what to do and to what extent.

The State Duma approved a shortened three-year budget

The State Duma on November 22 meeting approved the third reading of the draft budget for 2014 and the planning period 2015-2016. This was reported in the card bill online automated system of legislative activity.

Adoption of the document 248 deputies supported and opposed by 145 members of parliament. Budget revenues in 2014 will amount to 13.571 trillion rubles in 2015 - 14.565 trillion rubles in 2016 - 15.906 trillion rubles. Expenditures for 2014 are projected at 13.96 trillion in rubles, in 2015 - 15.362 trillion rubles in 2016 - 16.392 trillion rubles.

Thus, the budget deficit in 2014 will amount to almost 390 billion rubles a year to grow to 797 billion rubles, and in 2016 will be reduced to 487 billion rubles. GDP is expected to grow to 73.315 trillion rubles in 2014, 79.66 billion rubles in 2015 and 86.837 trillion rubles in 2016.

At the meeting on 22 November, the State Duma also adopted amendments to the bill on the three-year budget, according to which in 2014 abolished the indexation of salaries of military personnel, law enforcement officers and government officials.

Created a budget based on an oil price of $ 93 dollars in 2014, $ 95 - in 2015-2016. The estimated cost of raw materials is calculated on the budget rule that for revenues from oil and gas sales set "cut price". It is calculated as the average price of oil over the past few years.

The budget for the 2014-2016 years passed with significant cuts in spending. Ministry of Finance on the background of the economic slowdown recommended to reduce costs by five to ten percent.

So if these projections are correct , Russian GDP by 2016 will grow to 86.837 trillion or $ 2.691 Trillion compared to todays $ 2 trillion

Austin wrote:So if these projections are correct , Russian GDP by 2016 will grow to  86.837 trillion or $ 2.691 Trillion compared to todays $ 2 trillion

How much of that would be created by inflation and investments out of the country? GDP numbers are one thing, how they acquire it is another. Hopefully these are due to the investments and development started a year or two ago starting to work and show profits. Right now, majority of their investments are still under construction and construction has slowed down thanks to Sochi olympics. Olympics is a good idea, but should have been done during a time when big ticket investments are finished building, rather than putting a lot on hold for the olympics.

sepheronx wrote:

Austin wrote:So if these projections are correct , Russian GDP by 2016 will grow to  86.837 trillion or $ 2.691 Trillion compared to todays $ 2 trillion

How much of that would be created by inflation and investments out of the country? GDP numbers are one thing, how they acquire it is another. Hopefully these are due to the investments and development started a year or two ago starting to work and show profits. Right now, majority of their investments are still under construction and construction has slowed down thanks to Sochi olympics. Olympics is a good idea, but should have been done during a time when big ticket investments are finished building, rather than putting a lot on hold for the olympics.

GDP growth is related to growth inside the country so investement outside is not counted in GDP.

It depends on how the economy grows and how much they invest ....