In its 2016 outlook, Russia's Economic Development Ministry is forecasting a 0.8 percent GDP reduction instead of a previous 0.7 percent growth, reports business daily Vedomosti. Collapsing oil prices are the main cause.
The report estimates this year's average exchange rate against the dollar at 68.2 rubles, and the price of Russian oil blend Urals at $40. Inflation is forecast to hit 8.5 percent with capital outflow reaching $50 billion.
These figures are not official, but the newspaper claims it has a copy of the new outlook. An Economic Development Ministry spokesman confirmed the official update will be released this month.
Experts: Russia does not threaten the scale of the crisis in 1998
http://tass.ru/ekonomika/2587620
In the opinion of the Gaidar Forum Siluanova countered the head of the Accounting Chamber Tatyana Golikova, saying that the current economic situation has nothing to do with 1998. It believes that now there are certain risks associated with the execution of the budget 2016, which was recently adopted. "But I think that the main problem lies in the fact that, and what steps we should take, and in what time frame to execute or adjust the approved law, which was literally right law in December 2015", - said the head of the Accounting Chamber.
The economic situation in Russia today is very different from 1998, experts agree Golikova. "As long as the situation is, of course, is different. It is the duty at the time was at times more, so the pressure on the part of the foreign debt is not as strong as before. All things being equal the situation is different, but need a proactive response to the changing external conditions", - says chief Economist for Russia and the CIS Bank of America Merrill Lynch Vladimir Osakovsky.
At the end of 2015 the external debt of the Russian Federation amounted to about 14% of GDP, and international reserves of the Central Bank on January 1, 2016 - 368 billion. For comparison, at the end of 1998 the external debt amounted to about 148% of GDP, while the volume of international reserves as at 1 January 1999 - 12.2 billion dollars. "As long as we have a very moderate debt, which, in general, do not pose any threat to the budget. Expenses - yes, we are inflated, but there are countries much more crazy than we are. We are not the bad country in this regard. In principle there understanding that it is necessary to unwind a little bit back and optimized, "- adds the director of the Ministry of Finance NIFI Russia Vladimir Nazarov.
A Different Voice wrote:Reserve Fund reduced significantly in December. It'll be depleted by the end of 2016 if things don't improve.
Reserve Fund Shrinks in Dec.
You said what? http://www.nationaldebtclocks.org/debtclock/unitedstates
Russia doesn't enjoy the power of printing hot currencies.
So what. All of this is just innumerate prattle. I dare you all to produce the numbers proving your chicken little claims. No other f*cking country on this planet depends on a reserve fund. Neither does Russia.
A Different Voice wrote:Reserve Fund reduced significantly in December. It'll be depleted by the end of 2016 if things don't improve.
Reserve Fund Shrinks in Dec.
You said what? http://www.nationaldebtclocks.org/debtclock/unitedstates
Russia doesn't enjoy the power of printing hot currencies.
So what. All of this is just innumerate prattle. I dare you all to produce the numbers proving your chicken little claims. No other f*cking country on this planet depends on a reserve fund. Neither does Russia.
No point in looking too much into it. This news about the reserve funds have been mentioned on this very thread probably around half a dozen times close to a dozen times. Essentially, it will be mentioned dozen of more times till the end of this year. It may even change dates and be mentioned that 2017 will be the year it depletes, etc etc etc. They used a lot of it, it is true, but that isn't the only source they can obtain funds from to meet the budget needs. As well, if they plan to reduce the budget by 10%, chances are, much less will be used up (500B rubles or so less). But, the purpose of these reserve funds are for this very reason, to help fund the budget during tough times. And, in so, to prevent Russia from drastically increasing their debt quickly. So instead, the purpose of using a little bit of both is actually quite good in that it doesn't drastically increase debt but still get what they need more or less done.
I think some in the government are scared that their jobs are on the line. There is already too many politicians in Russia and apparently redundant positions (Economics Minister, Deputy Economics Minister, Ministry of Industry and Trade Minister, and Deputy minister, etc etc etc. Jobs that technically shouldn't have sub groups. Maybe they will continue to repeat themselves till they are caught not really doing anything, or they actually do something. Technically speaking, I think they are more or less trying to make it look like they are useful so they don't lose their job. Or the Media is just taking news from months ago, and repeat it over and over again cause they ran out of material to print.....
KVS, I would like to hear you rip this jerkoff apart.
Here are things I see wrong: 1) Yes, actually it is Obama's fault for the rates increase since USA, and after forcing EU's hand, blocked loans to Russian banks. So this guy is wrong. 2) There is hostility towards Russia from EU. Obviously 3) This guy deals with foodstuff. He should know that Russian businesses are getting contracts still to sell to Europe. He is mad cause his businesses in Europe cannot sell to Russia now. 4) He praised the 90's era for business. What a joke. 5) Tax is an issue? Taxation for businesses is still a joke compared to European countries. Don't know what this guy is complaining about. 6) China is a threat? Sounds like this guy is getting money from somewhere. Gee, I wonder from where? China isn't the best partner, but no country is for Russia. 7) Small businesses get no chance? Last I checked, Small businesses can get 3 year exemption from taxation in order to grow. If that isn't a chance, then this guy's business sucks.
Siluanov: Reserve Fund and National Welfare Fund may be "eaten" as early as 2016
http://tass.ru/ekonomika/2591637
VLADIVOSTOK, January 16. / TASS /. Reserve Fund and the non-invested funds of the National Welfare Fund can be spent already in 2016, if we abandon the fiscal optimization. This forecast was voiced by Finance Minister Anton Siluanov program "Vesti on Saturday with Sergei Brilev." Russian budget will receive less than 3 trillion rubles
Russian budget will receive less in 2016 than 3 trillion rubles in revenues at an average price of oil at $ 25 per barrel, Finance Minister predicts. "The budget is based on $ 50 per barrel. Therefore, the difference in the two ($ 25 per barrel), I want to say that revenue here, this difference is about more than 3 trillion rubles. If you and I imagine that the budget expenditure of about 16 trillion rubles, the decline in revenue to $ 3 trillion - this is serious ", - he said. Now the government adjusts its macroeconomic outlook for the current year, which are calculated on the basis of parameters of the budget. Budget 2016 is based on the price of $ 50 per barrel, but it is expected that the Ministry of Economic Development can reduce this benchmark to $ 40 per barrel. CBR stress scenarios based on the $ 35 per barrel. The reduction of budget expenditures by 10% will save 512 billion rubles
The reduction of budget expenditures by 10% in 2016 will save 512 billion rubles, said Anton Siluanov. The minister stressed that the reduction will not touch social obligations. "The reduction of 10% with the exception of the so-called protected items will make it possible to reallocate funds or savings in the amount of 500 billion rubles, 512 to be exact," - he said.
According Siluanova, the Ministry of Finance has set the task of ministries and departments to reduce costs by 10%, if they do not, the Ministry of Finance by the same amount sequestered budget. "Now we go just by the way of a different mechanism than it was last year. We said ministries and departments, here's the problem. They may be some programs do not cut, do not touch it, some may be completely transferred to more later date, or even close. If some agencies, our colleagues are not present (proposal to reduce costs - approx. TASS), we do then we will 10% recall limits. And it will be equally on all positions the same. Therefore, already Here the choice is, unfortunately, no "- he said. This Siluanov stressed that social obligations are met in full.
KVS, I would like to hear you rip this jerkoff apart.
Here are things I see wrong: 1) Yes, actually it is Obama's fault for the rates increase since USA, and after forcing EU's hand, blocked loans to Russian banks. So this guy is wrong. 2) There is hostility towards Russia from EU. Obviously 3) This guy deals with foodstuff. He should know that Russian businesses are getting contracts still to sell to Europe. He is mad cause his businesses in Europe cannot sell to Russia now. 4) He praised the 90's era for business. What a joke. 5) Tax is an issue? Taxation for businesses is still a joke compared to European countries. Don't know what this guy is complaining about. 6) China is a threat? Sounds like this guy is getting money from somewhere. Gee, I wonder from where? China isn't the best partner, but no country is for Russia. 7) Small businesses get no chance? Last I checked, Small businesses can get 3 year exemption from taxation in order to grow. If that isn't a chance, then this guy's business sucks.
The clown is clearly speaking from a list of liberast talking points. It is not some honest guy just stating an opinion.
1) He starts off with claiming he sees no threats to Russia from abroad and that Russia is irrelevant for the west (i.e. not even on its radar) and people should not watch "state-run" TV channels. This is obvious bunkum. Obviously Russia is not threatened by Belgium and China. But Russia is threatened by NATO, which has explicitly targeted Russia as a "threat" and started deploying troops and armour on its frontier aside from building a ring a bases around Russia. If Russia is not on the west's radar than I wonder why there is so much hate propaganda 24/7 against it. This businessman clown wants Russians to think that no such hate propaganda exists. But Russians can see it for themselves from western sources, they don't need Russian "state-run" TV to see it.
2) The brazen liar goes on to call the counter-sanctions by Russia a "criminal embargo" that benefits some well connected Russian companies. Clearly it has hurt his business and he is frothing mad. The problem here is that his business model is a Yeltsin era creation which serves foreign economic interests and not Russian interests. It matters f*ck all that some "well connected" Russian companies are now benefiting from this "criminal embargo". They are actually benefiting Russia and not NATO member states. Import substitution cannot be argued against if you care about development of Russia. I could give a rat's ass about some business that needs to import food into Russia that it could produce locally. If it closes because of sanctions and tariffs then tough luck. This clown shows what he truly thinks like, he is the one with the entitlement syndrome and the parasite. So naturally he wants the government to protect his racket like in the past.
3) He repeats the food destruction talking point. Well, genius, that is what your beloved NATO member states do. Any and all illegal goods are seized. In the case of food they are destroyed (I have not seen any evidence of the companies that shipped this food paying to ship it back) to send a clear signal that it is contraband and any livestock or pets are put down as well. This is serious business in the west and not just some "Russian peculiarity" or "wrong doing".
4) He drones about different taxation layers. Golly gosh, oh my. I mean that is totally unheard of in the west. In the west there are not taxes and fees. Here in Canada I have to pay a license plate renewal fee on a regular basis which is not part of my insurance fees and which is not part of the sizeable gasoline tax in my fuel. Of course he cites not numbers to prove how onerous are these Russian taxes. The typical liberast lying by omission on top of brazen lying.
5) He makes the ludicrous analogy of the government treating business like his like a butcher treats a cow. If that was true then there would be none left. He cites a couple of numbers of how many business closed but cites no numbers of how many opened. Obviously the target for this rant is a typical, ignorant media consumer who does not even know that there is rapid turnover in the small business part of the economy. Most small businesses do not last two years, and that is true in Canada and the rest of NATO. He also plays a dirty trick by comparing business closures between a year with and without a major recession.
If he wants sympathy for his plight, he should be fair in his criticisms. Instead he is acting as an anti-Russian propaganda tool. I am glad that he is not getting it the way he wants. This means that Russia's elected government is actually doing its job. If the government got sweet praise from such clowns that would be a indication it was selling the electorate down the river.
BTW, the behaviour of this clown businessman underscores a bitter reality. Since the money and business influence are in Washington, then Washington is the Mecca for such businessmen around the world. Their loyalty is to their god Mammon and not to their home countries. This is why a free government is needed to keep them under control. Unfortunately most governments are captive to business interests. So many countries are perpetually "developing".
The CEO of Russia’s biggest bank, the state owned Sberbank, German Gref delivered a scathing criticism of the country’s economy at an economic forum in Moscow 15th January. According to Gref, the biggest trend in the world economy is the “end of the hydrocarbon era”. He willingly shares the belief peddled in the Western media that Russia has foolishly relied on an economic model based on export of oil and gas while neglecting to develop its industry and modern sectors of the economy. Russia is thus doomed, Gref points out, to rank among the “downshifter countries” shedding their wealth as the oil money drains.
Strange enough, Gref contends that the dramatic fall in the price of oil is due to the “radical changes in global energy consumption patterns.” Obviously, no coherent analysis of the problem and its possible solutions can follow from such faulty premises. The drop in the oil price has certainly not been caused by any shifts to alternative energy sources and it is dubious if there has been a decrease in consumption at all beyond the effect of the overall downturn in the world economy. In reality, the sharp fall in the oil price reflects this global downturn, coupled with the over-supply caused by North American speculative investment in new oil wells fueled by zero-financing lending to super risky projects, and the sanctions trade wars.
Look around, the West is sinking
This brings us to one of the most fundamental defects in the thinking of Gref and his ilk: the criticism of Russia’s economy without any consideration to the global economy at large. They point at real – and invented – problems in the Russian economy while thinking – or letting out (?) – that the rest of the world, and in particular the West, would be performing well and developing, thanks to some presumed superior political and economic model. But the ugly fact is that the Western economies have totally failed and are able to keep up a feeble façade of decency only thanks to massive borrowing as shown by this Awara Accounting study. This they have been able to do for the past 10 years on the strength of the Western monopoly currencies that have enabled virtually zero-rate interests and stable currencies notwithstanding destructive and fatal lending on all levels of economic actors: state, corporate and household. Gref would be well advised to know that what we are experiencing today is not as much the end of any hydrocarbon era as it is the end of this era of massive Western borrowing with which the two-decade long consumption binge is kept rolling. In September 2015, we published a study on the pernicious effects of this suicidal Western debt Bacchanalia with predictions of an imminent crash of the whole system. This Awara Accounting study titled How the Dollar and Euro monopolies destroyed the real market economy. And what Hayek told about the need for competing currencies can be accessed here.
The “liberal” critics of the Russian economy want us to think that the West is doing well because of some supposed superior economic model of what is hyped as innovative economies. The real picture across the West, USA, Canada, Australia, Japan, the EU, is bleak with falling industrial production, failing exports, massive budget deficits, scaring trends in poverty and huge chronic unemployment, which the governments try to hide in official statistics by removing jobless people from the statistics. The only real innovation in the West during the last decade has been the innovation of the perpetual debt binge – only alas, it will not be perpetual.
Gref has joined the Kudrin club for monetarist idiots whose top priority is to undermine Russia. It's time to start rounding them up and shipping them to their NATO promised land.
The debt-adjusted GDP growth for Russia vs. some NATO members between 2009 and 2013. This chart is consistent with the real wage growth in Russia over the same period. It is strange for wages growth to be totally detached from GDP growth, but that is exactly what it was for a long time in Russia.
The CEO of Russia’s biggest bank, the state owned Sberbank, German Gref delivered a scathing criticism of the country’s economy at an economic forum in Moscow 15th January. According to Gref, the biggest trend in the world economy is the “end of the hydrocarbon era”. He willingly shares the belief peddled in the Western media that Russia has foolishly relied on an economic model based on export of oil and gas while neglecting to develop its industry and modern sectors of the economy. Russia is thus doomed, Gref points out, to rank among the “downshifter countries” shedding their wealth as the oil money drains.
Strange enough, Gref contends that the dramatic fall in the price of oil is due to the “radical changes in global energy consumption patterns.” Obviously, no coherent analysis of the problem and its possible solutions can follow from such faulty premises. The drop in the oil price has certainly not been caused by any shifts to alternative energy sources and it is dubious if there has been a decrease in consumption at all beyond the effect of the overall downturn in the world economy. In reality, the sharp fall in the oil price reflects this global downturn, coupled with the over-supply caused by North American speculative investment in new oil wells fueled by zero-financing lending to super risky projects, and the sanctions trade wars.
Look around, the West is sinking
This brings us to one of the most fundamental defects in the thinking of Gref and his ilk: the criticism of Russia’s economy without any consideration to the global economy at large. They point at real – and invented – problems in the Russian economy while thinking – or letting out (?) – that the rest of the world, and in particular the West, would be performing well and developing, thanks to some presumed superior political and economic model. But the ugly fact is that the Western economies have totally failed and are able to keep up a feeble façade of decency only thanks to massive borrowing as shown by this Awara Accounting study. This they have been able to do for the past 10 years on the strength of the Western monopoly currencies that have enabled virtually zero-rate interests and stable currencies notwithstanding destructive and fatal lending on all levels of economic actors: state, corporate and household. Gref would be well advised to know that what we are experiencing today is not as much the end of any hydrocarbon era as it is the end of this era of massive Western borrowing with which the two-decade long consumption binge is kept rolling. In September 2015, we published a study on the pernicious effects of this suicidal Western debt Bacchanalia with predictions of an imminent crash of the whole system. This Awara Accounting study titled How the Dollar and Euro monopolies destroyed the real market economy. And what Hayek told about the need for competing currencies can be accessed here.
The “liberal” critics of the Russian economy want us to think that the West is doing well because of some supposed superior economic model of what is hyped as innovative economies. The real picture across the West, USA, Canada, Australia, Japan, the EU, is bleak with falling industrial production, failing exports, massive budget deficits, scaring trends in poverty and huge chronic unemployment, which the governments try to hide in official statistics by removing jobless people from the statistics. The only real innovation in the West during the last decade has been the innovation of the perpetual debt binge – only alas, it will not be perpetual.
Gref has joined the Kudrin club for monetarist idiots whose top priority is to undermine Russia. It's time to start rounding them up and shipping them to their NATO promised land.
Agreed. Why does Russian government still allow such people to have any say or authority is beyond me. They are just shooting themselves in the foot. Gref is a real idiot, especially on his knowledge of the world (and western) economy. It is beyond me how he got a job in the first place.
sepheronx wrote:Agreed. Why does Russian government still allow such people to have any say or authority is beyond me. They are just shooting themselves in the foot. Gref is a real idiot, especially on his knowledge of the world (and western) economy. It is beyond me how he got a job in the first place.
Because such people are part of the ruling Russian elite which was born in the 1990s. Do you really believe that the people who wants the best for Russia get the high-ranking jobs?
This bugs me big time. Privatizing VEB might not be a bad idea but sberbank..... sberbank holds majority of the FOREX and privatizing it just spells bad news to me. It is bad enough they have a retard with absolutly no clue about why oil prices are dropping, as head of the bank (he claimed it is because of alternative energy from China, when reality is consumption is higher than before but production is even higher, and the fact that China imported massive amounts of coal and such for their use), but they want to privatize it and its assets?
I understand they will take precations on law and the fact that the purchaser will be Russian as well, but there are always loopholes and to do it with the bank that holds the forex may be a bad idea.
This bugs me big time. Privatizing VEB might not be a bad idea but sberbank..... sberbank holds majority of the FOREX and privatizing it just spells bad news to me. It is bad enough they have a retard with absolutly no clue about why oil prices are dropping, as head of the bank (he claimed it is because of alternative energy from China, when reality is consumption is higher than before but production is even higher, and the fact that China imported massive amounts of coal and such for their use), but they want to privatize it and its assets?
I understand they will take precations on law and the fact that the purchaser will be Russian as well, but there are always loopholes and to do it with the bank that holds the forex may be a bad idea.
Dropping oil prices are because of the following things:
-the Fed raising the interest rate (stronger dollar translates into a cheaper barrel) -investors betting on lower oil prices AKA buying up cheap shares (this out of control speculation is the major cause of the further fall) -overproduction
Watch the stock markets tomorrow (Monday). Sanctions were lifted off Iran and stock markets are going to react on that heavily. I suspect oil will fall between 3-6% tomorrow.
This bugs me big time. Privatizing VEB might not be a bad idea but sberbank..... sberbank holds majority of the FOREX and privatizing it just spells bad news to me. It is bad enough they have a retard with absolutly no clue about why oil prices are dropping, as head of the bank (he claimed it is because of alternative energy from China, when reality is consumption is higher than before but production is even higher, and the fact that China imported massive amounts of coal and such for their use), but they want to privatize it and its assets?
I understand they will take precations on law and the fact that the purchaser will be Russian as well, but there are always loopholes and to do it with the bank that holds the forex may be a bad idea.
Dropping oil prices are because of the following things:
-the Fed raising the interest rate (stronger dollar translates into a cheaper barrel) -investors betting on lower oil prices AKA buying up cheap shares (this out of control speculation is the major cause of the further fall) -overproduction
Watch the stock markets tomorrow (Monday). Sanctions were lifted off Iran and stock markets are going to react on that heavily. I suspect oil will fall between 3-6% tomorrow.
Yes and no.
- interest rate hike only came after the oil price had dropped from over $100 to well under $50, also although the notional rate is higher it does not seem to have had much actual effect. - there does not seem to be much evidence of 'shorting' having a major effect on the oil price drop. - overproduction, definitely. US production has increased dramatically over the past few years and was starting to affect all kinds of players. Both Saudi and Russia have, regardless of price, stepped up production to get as much revenue as they can.
Then there is - the rumoured Saudi/US price drop attack on Russia that kind of started it off. It now looks more likely that the covert Saudi target for initiating this move was not Russia but the US shale operation that it wanted to kill as a competitor. This looks as if it is working with shale prospecting and start ups stopped and many producers heading for default as they can't repay loans. This is forcing the Dallas Fed to start easing conditions on banks to protect the banks. - the world's strategic storage for bulk crude and downstream products is just about full, reducing demand - warm weather in some markets has reduced the winter demand in some markets - the world has entered recession, sea cargo traffic is very low with almost nothing moving in the Atlantic for example also reducing demand.
All in all, predatory pricing by the biggest producer, increased production and reduced demand have done in the oil price, probably for years. As you say more crude released by Iran will have an effect, but probably not too much as their infrastructure needs huge investment to get back to the 'old days. Watch out for investment for oil deals, as opposed to pure oil sales, over the next few months.
Bear in mind that it is not just oil that has gone over the cliff, just look at the miners, Rio Tinto, Glencore, Anglo American and BHP Billion, who have shed $350B off their share prices.
Russian Deputy Finance Minister Sergei Storchak says no question of going to western market with Bonds unless sanction are lifted , also he says going to China market also runs the risk of buyer of Russian Bond Ending with Russian Sanction
Storchak: Russia will not borrow in foreign markets, while the sanctioned
http://ria.ru/economy/20160118/1361254081.html
Storchak did not rule out a return to the external debt market Russia can realize through the Asian markets. "It could be China," - he said. But even in this case, have to wait for removing existing restrictions, because otherwise the sanctions can get Russian buyers of bonds, said the deputy minister.
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