Russian Economy General News: #5

Cyberspec wrote:

kvs wrote:

Austin wrote:Got this in an email from a friend who is an expert on Economics and follow the trends on Oil Price fall,  Gold etc

Oil fall IMO is due to demand destruction. Prices will rise but not now. Think- would you sell precious depleting resource for IOUs ie dollars? At some stage -and after having some buffer of dollars- sovereign nations will let oil price fall. And as demand is drying up in the west, brent and wti prices are down. The oil producers have given up on dollar. They dont trust it anymore. How soon until the people feel the same. The high yield bond market is going to go kaboom perhaps after rate hike - too many carry trades to unwind.

Gold- what difference will it make if u buy today for 1000$ or tomorrow for 1100$ or in 12 months later for 10,000$? , Buy when there is spare cash buy it  

Your friend understands the oil situation.   Many people including highly placed government officials in Russia simply do not.

Considering that Russia is one of the largest gold buyers lately, suggests that they know what's going on...

But not everyone agrees with that.  As well, there are individuals *cough*Kudrin*Cough* and ilk (people whom went to the same Higher school of economics in Moscow) keep stating otherwise.  CBR and various banks are the ones investing heavily into the gold.

In other news:
Putin instructed to set standards for quality and marginal cost of public procurement

Aconitum: transshipment at sea ports of Russia for 11 months increased by 3% to 608.9 million tons

Movement through the ports is good, and glad to see it growing.

kvs , What is the downside of weakening Rouble versus USD incase of fall in Oil Price ?

Today Rouble is trading at 70 to 1 USD when Ural is trading at 36

http://www.bloomberg.com/quote/USDRUB:CUR
http://www.bloomberg.com/energy


Lets says CBR reduced interest rate to 9 or 10 % which weakens rouble further to says 75 or 80 to 1 USD.

But reducing is takes care of most of budget deficit , What is the downside of weakning rouble in light of the fact that CBR is now targeting interest rate and not rouble rate

I may not be KVS, but I can state that it is imports.  Inflation on imports will jump as it will now cost effectively more for the same products imported.  Even in countries where they also have weaker currency, will also be considered more expensive.  But in light of that, it will further increase domestic demand for production and it may also mean further investments.  Not guaranteed though.

The thing to pay attention to is other currencies to the USD as well. CAD has dropped and will drop further, so it will hurt us too simply because we don't really produce much anymore. Krone will also drop. I imagine other currencies will drop too like the Bulivar and such. In this case, Russia can gain more out of these countries too.

The price of oil at $ 35 a barrel is not critical to the banking system - Gref
Interfax

The cost of a barrel of oil at $ 35 is not critical to Sberbank and the Russian banking system as a whole. This is the opinion predpravleniya Sberbank German Gref, "Interfax".

According to him, oil prices below $ 40 are additional challenges. "But in all cases we are considering, we including a variant of our stability, our economy, we expect the price of $ 35, and in all cases next year turns out not so critical," - he explained.

Gref said that Sberbank forecast can be projected on the entire banking system of Russia. According to him, 2016 will be difficult, "if prices stay at this level."

He also noted that if the low oil prices fall in the Russian economy may exceed expectations. "But some supercritical I honestly do not see it. I think it will be difficult for all public budgets, mainly the regional budgets, the debt will grow rapidly. I think that the federal deficit will be much larger than envisaged" - Gref said, adding that the low price of oil is necessary to think over the sources to cover the deficit or the sequestration of certain articles of the budget.

Ease of doing Business rank crucial for Russia

Worst of crisis over for Russia, but country needs to adjust to life with cheap crude - Putin

https://www.rt.com/business/326280-putin-oil-russian-budget/

Russian President Vladimir Putin said next year’s budget based on oil at $50 a barrel is too optimistic, considering current prices. However, he has assured the country that the worst of the economic crisis is over.

“We are aware of the high dependence of our economy on the price of our traditional export products – oil, gas and their derivatives. We proceeded from the fact that the average price for Brent will be $100 per barrel,” said Putin during a news conference on Thursday.

“When the price dropped from $100 to $50 per barrel we planned the budget considering these figures. Now the price is $38. We are forced to revise again,” Putin said.

Putin said low oil prices have dragged down the Russian economy, but it’s slowly recovering and the worst of the crisis is behind.

“It is a 3.7 percent GDP contraction, 12.3 percent inflation. The real income of the population has fallen, the investment in fixed assets decreased by 5.7 percent. However, statistics show that the crisis in the Russian economy as a whole has passed its peak. From the second quarter, there are signs of stabilization in business activity. In September and October, GDP grew by 0.1-0.3 percent compared to the previous month,” he said.

The President also addressed concerns over using the country's reserves to fill the hole in the budget left by falling crude prices. In October, Russian Finance Minister Anton Siluanov said the nation’s Reserve Fund could be depleted in 2016, forcing the government to dip into its last remaining reserve, the National Welfare Fund.

“Our foreign reserves stand at $364.4 billion. They’ve depleted a bit, but it’s still a very solid figure,” said Putin.

According to Russian Economic Development Minister Aleksey Ulyukaev, $40 oil doesn’t threaten stability in the economy, but won’t allow GDP, production and consumer demand to turn positive next year.

In the adopted budget for 2016, the Kremlin was relying on $50 per barrel and 63.3 rubles per dollar.

Tough to predict the future but it is far from clear that "the worst is over" for Russia's economy. Like all countries, the Russian government appears to be using optimistic projections for next year (i.e. revenue, inflation, oil prices, deficits, etc.). Even if things continue to go badly for a while, Russia is positioned well to weather the storm. Countries like Ukraine and Turkey can't say that.

Russia's 2016 deficit-2.8-2.9%

One guys comment on ria.ru comment section a week ago kinda stuck with me - he stated that there needs to be a push to make its budget $0 from oil and gas, and all profits taxed goes straight to the reserve/investments instead.  He is correct imo.

A Different Voice wrote:Tough to predict the future but it is far from clear that "the worst is over" for Russia's economy. Like all countries, the Russian government appears to be using optimistic projections for next year (i.e. revenue, inflation, oil prices, deficits, etc.). Even if things continue to go badly for a while, Russia is positioned well to weather the storm. Countries like Ukraine and Turkey can't say that.

Russia's 2016 deficit-2.8-2.9%

Predictions are silly imo, and Russia made the smart move of setting budgets yearly rather than advanced.  Less than 3% deficit is wonders for the situation Russia is in, wish we had the same in Canada (which we do not.  Deficit will increase even more now).  Russia can weather it simply for its industrial base and how its economy is set up. 80% of its GDP is reliant on domestic consumption.  So they can theoretically set up their economy, 80% at least, purely on the needs of their own people.  They can even stimulate it through things like average person wages increase and so on so forth (technically, inflation would also go up and it is an artificial increase in gdp, not real).  But that would hurt overall exports which is the other 20% and that is still large.  Russia, has a huge control on CIS market and due to lower wages per dollar ammount vs europe and costof goods overall, it has not only made Russian products cheaper in Europe (Russia is now exporting things to Europe they didnt do before) but also cheaper everywhere else.  An example is that Russia is now selling rolled steel to India that they didnt do before, or China is opening up JV manufacturing like TV's that wasnt there either.  Or increasing the domestic parts in manufacturing.

Turkey and Ukraine realied heavily on exports of goods to Russia due to Russias large consumption rate.

flamming_python wrote:

sepheronx wrote:Aconitum: transshipment at sea ports of Russia for 11 months increased by 3% to 608.9 million tons

Movement through the ports is good, and glad to see it growing.

Quite a pathetic increase to be frank, as are all such similar 'accomplishments' with low figures like this.

In the corporate world, if your business grows at 3% a year then it's stagnating, and dead sure to be overtaken soon by one that's growing 13%, or even 30%.

And you can't make the excuse of having a high base - Russia's transit figures are small compared to the world giants in this sector, whose corresponding growth figures were much higher when they were at Russia's current position. As a proportion of its total seaport transit potential, Russia is severely under-performing here.

Some people of course persist in telling us that the Russian economy is mighty and invincible, and only compares unfavourably because its economic figures are being under-cooked by world ranking agencies and financial instruments.

Well, it is a good thing you know math, and an increase is an increase.  If you like it or not.  As well, read what grew and what fell in shipments.

So, which ones growing at those rates your saying at same total weight?

Only you can take a growth and call it bad and things are falling.  Chin up. Accept growth for what it is.

Funny this entire bullshit of everything in buisness must grow!

Only retards believe that this is a healthy buisness that can hold itself only when it grows.

flamming_python wrote:

sepheronx wrote:Aconitum: transshipment at sea ports of Russia for 11 months increased by 3% to 608.9 million tons

Movement through the ports is good, and glad to see it growing.

Quite a pathetic increase to be frank, as are all such similar 'accomplishments' with low figures like this.

In the corporate world, if your business grows at 3% a year then it's stagnating, and dead sure to be overtaken soon by one that's growing 13%, or even 30%.

And you can't make the excuse of having a high base - Russia's transit figures are small compared to the world giants in this sector, whose corresponding growth figures were much higher when they were at Russia's current position. As a proportion of its total seaport transit potential, Russia is severely under-performing here.

Some people of course persist in telling us that the Russian economy is mighty and invincible, and only compares unfavourably because its economic figures are being under-cooked by world ranking agencies and financial instruments.

3% is fkn huge on that scale. Some countries wish they had constant 3% grow in all fields.

Sometimes 3% is alot more than 20%. The important part here is the base number. 3% of 500 million is alot more than 20% of 5 million.

What fruitloop corporate style nonsense are you using. Growth is growth, I know many companies in my country would give an arm and leg to have even 1% at end of business year. What is with Russians and your eternal pessimism, it pisses me off.

Russia was never major sea trade route... what does it connect? Polar bears and camels in Iran? Russia is important road between East and West when Euroasia in mind, other than that all major sea routes are not near Russia except northen route but no need to stop in Russian ports at all for that.

No Bosfor, Gibraltar, Suez, no wast warm water ports...no key sea route is connected with Russia. However they are connected with Turkey, Greece, Singapore, China, Japan...Panama...

Militarov wrote:Russia was never major sea trade route... what does it connect? Polar bears and camels in Iran? Russia is important road between East and West when Euroasia in mind, other than that all major sea routes are not near Russia except northen route but no need to stop in Russian ports at all for that.

No Bosfor, Gibraltar, Suez, no wast warm water ports...no key sea route is connected with Russia. However they are connected with Turkey, Greece, Singapore, China, Japan...Panama...

A high concentration of fast rail/maglev networks freight capacity/efficiency should vastly surpass anything a warm water port could provide.

magnumcromagnon wrote:

Militarov wrote:Russia was never major sea trade route... what does it connect? Polar bears and camels in Iran? Russia is important road between East and West when Euroasia in mind, other than that all major sea routes are not near Russia except northen route but no need to stop in Russian ports at all for that.

No Bosfor, Gibraltar, Suez, no wast warm water ports...no key sea route is connected with Russia. However they are connected with Turkey, Greece, Singapore, China, Japan...Panama...

A high concentration of fast rail/maglev networks freight capacity/efficiency should vastly surpass anything a warm water port could provide.

Yeah railroad lines toward China, India, Mongolia, Iran, South Korea etc are far more beneficial for Russia itself. But i just tried to say that Russia having small amount of actual harbor transit is due to fact they are not on major sea routes and its natural.

magnumcromagnon wrote:

Militarov wrote:Russia was never major sea trade route... what does it connect? Polar bears and camels in Iran? Russia is important road between East and West when Euroasia in mind, other than that all major sea routes are not near Russia except northen route but no need to stop in Russian ports at all for that.

No Bosfor, Gibraltar, Suez, no wast warm water ports...no key sea route is connected with Russia. However they are connected with Turkey, Greece, Singapore, China, Japan...Panama...

A high concentration of fast rail/maglev networks freight capacity/efficiency should vastly surpass anything a warm water port could provide.

Rail, yes, but Maglevs come on there crazy expensive and probly high maintenance too.

Russian Arms Producers Enjoyed 1.5-Time Rise Against General Recession

http://mil.today/2015/Weapons10/