Russian Economy General News: #1

Austin wrote:US will simply impose economic sanction Russia and Iran or their respective banks. They have already warned on this.  So it would be naive to go with such deal.

Austin wrote:

sepheronx wrote:Reading your drivel is annoying Austin.

Relax its just your young 20's that annoying you .....me in mid 30's find no harm in asking for a POV   


Now for some news sepheronx may not like   

OECD: Corruption and traffic jams biggest problems for Russia’s business climate

Viktor wrote:In line with the economic philosophy of the new financial minister.

Russia needs to boost small businesses in 2014, Medvedev tells Gaidar Forum

sepheronx wrote:

Austin wrote:High Speed Railway Postponed   

Medvedev: Russia’s government to postpone Moscow-Kazan high-speed railroad project

Thats a shame. Instead of postponing it, they should stretch out the financing of it to longer term to make it easier to pay for. The high speed railway is very important and in some areas like California, it can generate an annual $1B. Not to mention the amount of money going to and from Moscow and Kazan. Hope they do go back to this project. It is well known that infrastructure development is important to long term growth but how can you get thag if they postpone such projects? Unless they are waiting for olympics to be over to then concentrate more money and resources to these other projects?

sepheronx wrote:I had a good conversation with a guy at work (HR - Statistics) and he said something interesting regarding global economy.

Pretty mich, he stated that it appeared to be controlled/Fabricated and it really has more to do with banking and strength/control than it is about an end product. He further explained that back in London, it was the manufacturing center for England, yet now, they produce nothing. Whats making it grow is its influx of foreigners and the stock exchange, while it still sells British culture to many other countries (former colonies).

Russia is a large economy with many enterprises. Whats funny is the magical words that get thrown around like: Corruption, Diversify, Multiculteralism, and less regulations. But, if you look at the more prospering countries like India and China, they have massive corruption. About as much or more than Russia (no, the transperency index is not a good indicator as it relies on perception). So corruption can only be a factor, amd possibly a small one. Ok, then what about diversified economy? Well, what does that mean? If you look back from the late 90's and early 2000 to now, Russia had still quite a few industries building high tech products, heavy industrial goods and Energy development. It was pretty diversified. But now, you have significantly more, with Nanotech companies popping up, car manufacturing up, more personal wealth for domrstic consumption, more semiconductor facilities, ect. Yet, in all of that, people are saying they are not diversified. So what does that word mean then? In the end, it ends up as a perception more so than anything else.

Ultimately, what was boiled down for me, was that because of Russia's politics, and lack of control, will make it never rich. They have products built in Russia en mass, but no one buys them outside of CIS countries cause they are competitors and so tarrifs destroys sales. Maybe, propping up its neighbours to be economically strong, will help Russia in long run in order to make sales of their other products. Or go the way they are now and not be successful. Because all Europe and China wants is your resources, not end goods. To sell end goods to China, there should be policies in place where both sides have to sell each other a # of end goods for each sector.

There is no such thing as a conpetitive good, when the opponent will not import your product because it will compete with theirs.

Edit: forgot to mention that since the market is already flooded with cheap end goods which will pretty much not end up doing any good for Russia if they competed against. Hence why you dont see Germany doing such manufacturing. USA does but a lot of the components are not made in USA, and the cost of the goods are expensive (Kirkland brand, Kitchenaid,etc).

sepheronx wrote:
Ultimately, what was boiled down for me, was that because of Russia's politics, and lack of control, will make it never rich. They have products built in Russia en mass, but no one buys them outside of CIS countries cause they are competitors and so tarrifs destroys sales. Maybe, propping up its neighbours to be economically strong, will help Russia in long run in order to make sales of their other products. Or go the way they are now and not be successful. Because all Europe and China wants is your resources, not end goods. To sell end goods to China, there should be policies in place where both sides have to sell each other a # of end goods for each sector.

We have agreed that Rosatom projects, too, may be implemented with the support of the National Welfare Fund,” he said on Sergei Brilev’s Vesti v Subbotu (News on Saturday) television programme on January 18.

Siluanov did not specify the projects, but said that “these are very beneficial projects in terms of keeping our enterprises working and creating high-skilled jobs. But most importantly, we will get [enterprises] busy for decades ahead.”


Deputy Minister of Economic Development Nikolai Podguzov said earlier this week that Russia might start one or two investment projects in 2014 using the money from the National Welfare Fund.

“I think it would be good if we start implementing one or two projects in 2014,” he said.



More than 40 percent of the National Welfare Fund’s assets will go into investment projects, First Deputy Prime Minister Igor Shuvalov said.

“The decision has been made to leave the 40-percent limit unchanged. Some had proposed to raise it to 50-60 percent. However the president made the decision that the previously declared 40 percent was the limit for the government to observe,” he said.

Shuvalov said that the 40 percent included 670 billion roubles from the Welfare Fund’s assets placed in Vnesheconombank and the funding to be earmarked for the modernisation of the Trans-Siberian and Baikal-Amur Railways and the construction of the Central Ring Road outside Moscow. This leaves 150 billion roubles that were earlier intended to be used for building the high-speed railway from Moscow to Kazan, Tatarstan, in the Volga region. “This project was discussed. It will not be dropped and instructions were issued to prepare a feasibility study for this project to see how much it will cost and how soon the investment can return. Only after that will we consider the possibility of financing the project,” Shuvalov said.

“The Fund’s regulations allow it to invest up to 40 percent of its assets,” Putin said.


He believes that the nine billion U.S. dollars attracted by the Russian Direct Investment Fund into joint investment projects could provide strong support for the National Welfare Fund’s financial commitments.

President Vladimir Putin said that the government had made the decision to invest the Welfare Fund’s assets in transport projects such as the modernisation of the Trans-Siberian and Baikal-Amur Railways, and the construction of the Central Ring Road outside Moscow.

“I know that the Russian Direct Investment Fund has prepared an impressive portfolio of infrastructure projects that have evoked interest among private companies, including foreign ones, which are prepared to act as co-investors,” the president said. “The Fund has already attracted about nine billion U.S. dollars’ worth of foreign capital into joint investment projects. I believe this money can provide strong support for the Welfare Fund’s financial commitments.”

The president believes that long-term resources and the sharing of risks with private investors will ensure good returns on investment in Russian infrastructure.

At the same time, Putin stressed the need to remember other projects such as the development of Moscow’s aviation hub, Siberia and the Russian Far East.

The Russian government has also allowed the Finance Ministry to invest no more than 10 percent of assets from the National Welfare Fund in high-risk bonds.

The government will make separate decisions in each instance. But its resolution “allows the Finance Ministry to invest a limited portion of National Welfare Fund’s assets (no more than 10 percent) in the debt obligations of foreign states with a higher rate of return (risk) than sovereign debt obligations that make up the biggest part of the Fund’s investment portfolio,” Siluanov said.

Russia’s gold and currency reserves stand at about 520 billion U.S. dollars, and the National Welfare Fund amassed three trillion roubles (100 billion U.S. dollars) in 2013, growing by 7.8 percent.

Russian Finance Minister Anton Siluanov said he expected inflation to be around 5 percent in 2014.

Speaking of the rouble, the minister said he would not project any downward or upward trend in its exchange rate at the moment.
“As Ministry of Finance we must always make sure that the commitments we have made in the budget are fulfilled completely,” Siluanov said on Sergei Brilev’s Vesti v Subbotu (News on Saturday) television programme on January 18.

“Even if the price of oil drops to 90 U.S. dollars per barrel now or even lower, we will be able to fulfill our obligations under a three-year budget,” he said.

The bank cut its WTI price forecast for 2014 by 10.1 per cent to $88.75 per barrel, and for 2015 by 10.5 per cent to $85.00 per barrel.

The bank trimmed its average 2014 Brent price forecast by 8.2 per cent to $97.50 per barrel, and 2015 by 4.5 per cent to $100.00 per barrel.

sepheronx wrote:I had a good conversation with a guy at work (HR - Statistics) and he said something interesting regarding global economy.

Pretty mich, he stated that it appeared to be controlled/Fabricated and it really has more to do with banking and strength/control than it is about an end product. He further explained that back in London, it was the manufacturing center for England, yet now, they produce nothing. Whats making it grow is its influx of foreigners and the stock exchange, while it still sells British culture to many other countries (former colonies).

Russia is a large economy with many enterprises. Whats funny is the magical words that get thrown around like: Corruption, Diversify, Multiculteralism, and less regulations. But, if you look at the more prospering countries like India and China, they have massive corruption. About as much or more than Russia (no, the transperency index is not a good indicator as it relies on perception). So corruption can only be a factor, amd possibly a small one. Ok, then what about diversified economy? Well, what does that mean? If you look back from the late 90's and early 2000 to now, Russia had still quite a few industries building high tech products, heavy industrial goods and Energy development. It was pretty diversified. But now, you have significantly more, with Nanotech companies popping up, car manufacturing up, more personal wealth for domrstic consumption, more semiconductor facilities, ect. Yet, in all of that, people are saying they are not diversified. So what does that word mean then? In the end, it ends up as a perception more so than anything else.

Ultimately, what was boiled down for me, was that because of Russia's politics, and lack of control, will make it never rich. They have products built in Russia en mass, but no one buys them outside of CIS countries cause they are competitors and so tarrifs destroys sales. Maybe, propping up its neighbours to be economically strong, will help Russia in long run in order to make sales of their other products. Or go the way they are now and not be successful. Because all Europe and China wants is your resources, not end goods. To sell end goods to China, there should be policies in place where both sides have to sell each other a # of end goods for each sector.

There is no such thing as a conpetitive good, when the opponent will not import your product because it will compete with theirs.

Edit: forgot to mention that since the market is already flooded with cheap end goods which will pretty much not end up doing any good for Russia if they competed against. Hence why you dont see Germany doing such manufacturing. USA does but a lot of the components are not made in USA, and the cost of the goods are expensive (Kirkland brand, Kitchenaid,etc).

Economists consider stagflation particularly tough to battle because, unlike recessions or periods of slowing growth with typically low inflation, cutting interest rates risks causing prices to spiral.

While some officials and industrialists have called for a cut to interest rates to boost growth, the central bank has stood firm, saying that it needs to bring down inflation and that Russia's economic woes require structural remedies, not a monetary one.

OECD said in a report released Wednesday that it sees Russia's economic slowdown as temporary and expects it to pick up to 2.3% in 2014 and 2.9% in 2015. It notes, however, that growth will lag behind average global expansion until 2030, unless structural reforms are made.

Austin wrote:Hannibal or any body can tell me if Structural Reforms is the key problem that impending growth as Russian Central Bank says it.

What is the Structural Reforms needed ?

Why are they not doing this Structural Reforms so far ?