Russian Economy General News: #3

Gold reserves in the country's international reserves increased in 2014 by 16.5 percent, from 1,036 to 1,207 thousand tons. This is evidenced by the Bank of Russia fresh materials.

The physical volume of gold in international reserves in recent years has been growing steadily. For comparison, on January 1, 2007 the gold reserves of the Central Bank in the bins were only 402 tons. Made today the volume of gold reserves in reserves - the maximum for the country over the past two decades.

In December 2014 the Central Bank increased its gold reserves by another 19 tons. Total for 2014 Bank purchased about 171 tons. Mainly this policy reduces the financial dependence of the Russian market of foreign currency to a greater extent on the dollar, experts say. The Central Bank commented that the circulation of gold in the domestic market can be used by the Bank of Russia as an additional instrument to regulate the ruble liquidity of the banking sector.

In this case, it follows from the Central Bank, the money value of gold reserves increased by 15.3 percent. If on 1 January 2014 it was 39.99 billion in December rose to 46.089 billion dollars. This represents almost 12 percent of total reserves.

According to international experts, in 2014 Russia leads in terms of purchasing gold from other countries.

Capital flow from Russia in 2015 may reach $90-100 billion — Kudrin

DAVOS, January 23. /TASS/. The capital outflow from Russia in 2015 will total $90-100 billion, former Russian finance minister Alexey Kudrin said.

"We should not downplay the influence of sanctions. We should clearly understand their cost and try to reduce it," Kudrin said at the World Economic Forum in Davos.

According to him, state corporations did not create an innovation economy in Russia.

"That conclusion can be clearly drawn. They can say 'we're doing something' but it is 20 times less than what is needed for Russia to be competitive," he said.

Kudrin believes "the government should not work actively in the economy," particularly in the oil industry.

On sanctions against Russia and anti-crisis measures

Tightening of Western sanctions against Russia will reduce the positive effect of the government’s anti-crisis measures, Russia's former finance minister went on to say.

“If sanctions are enhanced, this will reduce by 50% the effectiveness of all measures being discussed now,” Kudrin told the World Economic Forum in Davos, adding that even in the presence of sanctions it was possible to achieve economic growth.

Kudrin said he did not believe sanctions would be tightened. “We should understand that… in the long run, steps will be taken to settle [the situation around Ukraine]. Then the sanctions will be reduced,” he added.
http://itar-tass.com/en/economy/772954

AlfaT8 wrote:Kudrin's back.

Capital flow from Russia in 2015 may reach $90-100 billion — Kudrin

DAVOS, January 23. /TASS/. The capital outflow from Russia in 2015 will total $90-100 billion, former Russian finance minister Alexey Kudrin said.

"We should not downplay the influence of sanctions. We should clearly understand their cost and try to reduce it," Kudrin said at the World Economic Forum in Davos.

According to him, state corporations did not create an innovation economy in Russia.

"That conclusion can be clearly drawn. They can say 'we're doing something' but it is 20 times less than what is needed for Russia to be competitive," he said.

Kudrin believes "the government should not work actively in the economy," particularly in the oil industry.

On sanctions against Russia and anti-crisis measures

Tightening of Western sanctions against Russia will reduce the positive effect of the government’s anti-crisis measures, Russia's former finance minister went on to say.

“If sanctions are enhanced, this will reduce by 50% the effectiveness of all measures being discussed now,” Kudrin told the World Economic Forum in Davos, adding that even in the presence of sanctions it was possible to achieve economic growth.

Kudrin said he did not believe sanctions would be tightened. “We should understand that… in the long run, steps will be taken to settle [the situation around Ukraine]. Then the sanctions will be reduced,” he added.
http://itar-tass.com/en/economy/772954

Viktor wrote:And the first from Russian official - 2015 GDP will be close to 0% ... unlike -5% or more of western media hysterical hype

Shuvalov: Russian economy this year will stagnate

PayPal, Google join Apple in Crimea exodus

The newest part of the Russian Federation, the Crimea peninsula is now cut off from PayPal and Google products and services, as sanctions forbid US companies from providing services to the region.

“Unfortunately, currently we are not able to provide our services to the clients in Crimea. We apologize for any related inconveniences,” a PayPal spokesperson told TASS.

All PayPal and Google Adsense accounts registered in Crimea will be frozen starting February 1, 2015. However, Crimean residents have been complaining on social networks the service stopped over a week ago, TASS reports.

The payment system lets users make internet money transfers free of charge, and is a subsidiary of eBay.

There are some reports that residents have been able to successfully circumvent the ban by linking their registration and accounts to neighboring Russian regions that are just 46 kilometers away across the Kerch straight, the waterway that separates Crimea from mainland Russia.

The most enterprising of them bypass the ban on PayPal in the Crimea, tying their accounts in the payment system for credit cards registered in the Russia, for example in Krasnodar.

Yandex, the Russian counterpart to Google, still operates on the peninsula. About 56 percent of Crimean citizens have internet in their homes, according to a Gallup report for the US Broadcasting Board of Governors

Earlier this week, America’s Apple Inc. pulled the plug on its operations in Crimea, citing it could no longer work under the sanction regime.

On December 19, US President Barack Obama signed a decree that bans exports, technology transfer, and other services to Crimea.

Payment systems Visa and MasterCard stopped serving Russian banks in Crimea just days after the new sanctions were introduced.

READ MORE: Sanctioned: Visa, MasterCard suspend servicing Russian banks in Crimea

The US does not recognize the decision Crimea made to join Russia in March of 2014, and President Obama hopes the sanctions will change Russia’s course in Crimea and Ukraine.
http://rt.com/business/225619-paypal-google-crimea-stop/

Rising unemployment to affect most sectors in Russia — former finance minister

DAVOS, January 23. /TASS/. Unemployment in Russia will affect the majority of sectors in 2015 and will mostly hit the construction industry, the former Russian finance minister and the head of the Civic Initiatives Committee think tank Alexey Kudrin told TASS on the sidelines of the World Economic Forum in Davos, Switzerland on Friday.

“It will affect the majority of sectors, mainly the ones oriented on the local consumer. Exporters will be hit to a lesser extent. In the construction sector, hundreds of thousands of employees have been dismissed. State companies facing output reduction will also cut jobs,” Kudrin said.

First Deputy Prime Minister Igor Shuvalov said in Davos on Friday that the Russian economy should expect unemployment rate to rise in 2015. He added that the government has an anti-unemployment plan to support Russians in overcoming the crisis.
http://itar-tass.com/en/economy/773084

AlfaT8 wrote:

PayPal, Google join Apple in Crimea exodus

The newest part of the Russian Federation, the Crimea peninsula is now cut off from PayPal and Google products and services, as sanctions forbid US companies from providing services to the region.

“Unfortunately, currently we are not able to provide our services to the clients in Crimea. We apologize for any related inconveniences,” a PayPal spokesperson told TASS.

All PayPal and Google Adsense accounts registered in Crimea will be frozen starting February 1, 2015. However, Crimean residents have been complaining on social networks the service stopped over a week ago, TASS reports.

The payment system lets users make internet money transfers free of charge, and is a subsidiary of eBay.

There are some reports that residents have been able to successfully circumvent the ban by linking their registration and accounts to neighboring Russian regions that are just 46 kilometers away across the Kerch straight, the waterway that separates Crimea from mainland Russia.

The most enterprising of them bypass the ban on PayPal in the Crimea, tying their accounts in the payment system for credit cards registered in the Russia, for example in Krasnodar.

Yandex, the Russian counterpart to Google, still operates on the peninsula. About 56 percent of Crimean citizens have internet in their homes, according to a Gallup report for the US Broadcasting Board of Governors

Earlier this week, America’s Apple Inc. pulled the plug on its operations in Crimea, citing it could no longer work under the sanction regime.

On December 19, US President Barack Obama signed a decree that bans exports, technology transfer, and other services to Crimea.

Payment systems Visa and MasterCard stopped serving Russian banks in Crimea just days after the new sanctions were introduced.

READ MORE: Sanctioned: Visa, MasterCard suspend servicing Russian banks in Crimea

The US does not recognize the decision Crimea made to join Russia in March of 2014, and President Obama hopes the sanctions will change Russia’s course in Crimea and Ukraine.
http://rt.com/business/225619-paypal-google-crimea-stop/

Wow, guess Crimea will have to switch to Bitcoin.

P.S: Doesn't Russia have a PayPal equivalent??

AlfaT8 wrote:Man, Kudrin is in top form, it's one panic after another with this guy.  

BTW how much has Russia's unemployment gone up??

Austin wrote:Russia Faces $40 Billion Battle to Stave off Banking Crisis

http://www.themoscowtimes.com/business/article/russia-faces-40-billion-battle-to-stave-off-banking-crisis/514847.html

kvs wrote:

AlfaT8 wrote:Man, Kudrin is in top form, it's one panic after another with this guy.  

BTW how much has Russia's unemployment gone up??

http://www.gks.ru/bgd/free/B00_25/IssWWW.exe/Stg/d000/I000040R.HTM

It was 5.2% in November after hovering around 4.9% for several months.  No indication of any collapsing Russian economy whatsoever.

par far wrote:A bit off topic question, Russia is sometimes writing off debt to other conutries, why is that? Does anything good come out of it?

Austin wrote:http://m.ria.ru/economy/20150124/1044098492.html

He says russia debt is 12-13 % and if required can be increased

How can Russia increase debt do they print more money which means higher inflation or some other way they increase debt ?

Austin wrote:

kvs wrote:

Austin wrote:http://m.ria.ru/economy/20150124/1044098492.html

He says russia debt is 12-13 % and if required can be increased

How can Russia increase debt do they print more money which means higher inflation or some other way they increase debt ?

There is something called bonds.   Like Canada Bonds.  

But who will buy it ? Most intl customer wont touch it as its rated junk by phoney agency

Austin wrote:

kvs wrote:

Austin wrote:http://m.ria.ru/economy/20150124/1044098492.html

He says russia debt is 12-13 % and if required can be increased

How can Russia increase debt do they print more money which means higher inflation or some other way they increase debt ?

There is something called bonds.   Like Canada Bonds.  

But who will buy it ? Most intl customer wont touch it as its rated junk by phoney agency

January 23. FINMARKET.RU - The situation in the Russian economy is "very heavy", the economy enters into a deep and protracted crisis than in 2008. This is not a reason to panic, but the problem can not be underestimated. The need for reform, said First Deputy Prime Minister Igor Shuvalov .
Economy goes to the bottom
"Russia is in a very difficult situation. When asked how we relate to what happens now, I would say that outwardly we are seeing manifestations such as if it is softer than in 2008-2009. But this is only apparent ease. In fact, the depth and complexity, it seems to me that we have a year in a state when we enter into a long and complex crisis, "- said First Deputy Prime Minister Igor Shuvalov, speaking at a forum in Davos session on the situation in Russia ..
According to him, the further development scenarios may be different - the situation could worsen, or, on the contrary, as in 2009, the price of Russian exports turn around and go up, but this does not negate the deep structural problems in the economy.
The trouble of the Russian economy - the lack of modernization
"The trouble for the Russian economy is that the modernization agenda, which appeared due to the crisis in 2008, was quickly eroded with increasing oil prices and quickly began to change in 2011-2012, many began to think that everything is fine, formally ended the crisis. But in fact there is no crisis, we have not experienced, "- said the first deputy prime minister.
"In fact, the crisis we did not come out, and then began to move to another, even before the events in Ukraine, and it became clear - here it is a structural crisis, here he comes. Then came the summons sanctions. All this, of course, very unpleasant. But I reacted to this so - maybe it's another chance not to be missed Russia. After a series of decades, we will be able to assess whether able Russia to seize it, "- he added.
The agenda of reforms can "disappear" if export prices start to rise, but it is possible that oil prices may continue to decline. "
Shuvalov said that the consolidation of Russian society around the government - good condition for reform.
"This condition (anti-Russian sanctions), which gives a very good handicap" - said Shuvalov.
"If the Ukrainian crisis was not, and we have entered the phase of the price of oil at $ 47, or if it fell below, and she may have dropped, and there would be factors of Ukraine, sanctions and everything else, it seems to me, the situation was would be much tougher, "- he said.
"Therefore, when such a high consolidation and stringent internal and external conditions necessary to carry out the agenda (reforms). If it were not for consolidation, this agenda was to spend twice as hard," - said Shuvalov.
"To carry out reforms in poor external and internal conditions and low government support of the population - it is unlikely someone will. In this case, you could just flirt and carry out populist promises of social policy", - concluded the first vice-premier.
You can create a new economy and sanctions
In order to develop the economy needs investment, but their involvement is now difficult because of geopolitical factors, Shuvalov said. According to him, the authorities should prepare for the scenario of long-term external constraints, have gone through, for example, South Africa and Chile.
"I do not think there is an opportunity for politicians to quickly resolve the Ukrainian crisis. I treat this as one who has to consider worst-case scenario. Investors will still be looking at the real benefits. We have the experience, both in South Africa sanctions developed in difficult conditions developed in Chile. Is it possible to create a modern economic system with political difficulties? The answer is - it is possible "- Shuvalov said.

sepheronx wrote:Shuvalov: the economy enters into a long and deep crisis than in 2008

January 23. FINMARKET.RU - The situation in the Russian economy is "very heavy", the economy enters into a deep and protracted crisis than in 2008. This is not a reason to panic, but the problem can not be underestimated. The need for reform, said First Deputy Prime Minister Igor Shuvalov .
Economy goes to the bottom
"Russia is in a very difficult situation. When asked how we relate to what happens now, I would say that outwardly we are seeing manifestations such as if it is softer than in 2008-2009. But this is only apparent ease. In fact, the depth and complexity, it seems to me that we have a year in a state when we enter into a long and complex crisis, "- said First Deputy Prime Minister Igor Shuvalov, speaking at a forum in Davos session on the situation in Russia ..
According to him, the further development scenarios may be different - the situation could worsen, or, on the contrary, as in 2009, the price of Russian exports turn around and go up, but this does not negate the deep structural problems in the economy.
The trouble of the Russian economy - the lack of modernization
"The trouble for the Russian economy is that the modernization agenda, which appeared due to the crisis in 2008, was quickly eroded with increasing oil prices and quickly began to change in 2011-2012, many began to think that everything is fine, formally ended the crisis. But in fact there is no crisis, we have not experienced, "- said the first deputy prime minister.
"In fact, the crisis we did not come out, and then began to move to another, even before the events in Ukraine, and it became clear - here it is a structural crisis, here he comes. Then came the summons sanctions. All this, of course, very unpleasant. But I reacted to this so - maybe it's another chance not to be missed Russia. After a series of decades, we will be able to assess whether able Russia to seize it, "- he added.
The agenda of reforms can "disappear" if export prices start to rise, but it is possible that oil prices may continue to decline. "
Shuvalov said that the consolidation of Russian society around the government - good condition for reform.
"This condition (anti-Russian sanctions), which gives a very good handicap" - said Shuvalov.
"If the Ukrainian crisis was not, and we have entered the phase of the price of oil at $ 47, or if it fell below, and she may have dropped, and there would be factors of Ukraine, sanctions and everything else, it seems to me, the situation was would be much tougher, "- he said.
"Therefore, when such a high consolidation and stringent internal and external conditions necessary to carry out the agenda (reforms). If it were not for consolidation, this agenda was to spend twice as hard," - said Shuvalov.
"To carry out reforms in poor external and internal conditions and low government support of the population - it is unlikely someone will. In this case, you could just flirt and carry out populist promises of social policy", - concluded the first vice-premier.
You can create a new economy and sanctions
In order to develop the economy needs investment, but their involvement is now difficult because of geopolitical factors, Shuvalov said. According to him, the authorities should prepare for the scenario of long-term external constraints, have gone through, for example, South Africa and Chile.
"I do not think there is an opportunity for politicians to quickly resolve the Ukrainian crisis. I treat this as one who has to consider worst-case scenario. Investors will still be looking at the real benefits. We have the experience, both in South Africa sanctions developed in difficult conditions developed in Chile. Is it possible to create a modern economic system with political difficulties? The answer is - it is possible "- Shuvalov said.

Good read actually.  Although, Shuvolov thinks best economic models to look at when you are sanctioned and access to foreign credit is gone, is South Africa and Chile's model.  Then it occurred to me, back in the 70's during the Angolan Bush war, South Africa had to develop its own defense and other industries when they were sanctioned by US and the rest of the world pretty much.  They not only managed to develop their own industry, but also managed to build even Nukes.  I have to say, it was quite impressive really.  US likes to think their sanctions worked against South Africa, but all it did was make the rich flee the country with their wealth and the rest of the country hold together for a very long time.  But in the end, when they decided to end the apartheid, they did it very fast rather than not easing it through (much like the fall of communism) and it created chaos.

I am not familiar with sanctions against Chile in the past (dating somewhere in the 70's) but I am familiar with Iran's, and I would say their economic model is a good one to also look into as well (this is also prime opportunity to sign a free trade agreement with Iran and boost trade with them).

The previous strategy to acquire distribution networks deep in EU markets. And while the report's authors are more cautious, this was also in part politically motivated. It was meant to exert Russian political power as much as to make profits for Gazprom, which is one reason the European Union drew up regulations to obstruct it.