Russian Economy General News: #6

NYT Propagandist Says Russian Banks Not Falling Because Russians Are Dumb, What's the Real Reason?

http://russia-insider.com/en/business/nyt-propagandist-says-russian-banks-not-falling-because-russians-are-dumb-whats-real-reason

How the Sanctions Are Preparing the Ground for the Next Russian Economic Boom

http://russia-insider.com/en/business/how-sanctions-are-preparing-ground-russia-boom/ri12690

Russian CB reserves recovery since may 2015

Nice

Gold production in Russia increased in 2015 to 294 tonnes

New York times was always bad. Same with Washington post.  Believe it or not but LA times is far more unbiased than most.

In the end, common sense and basic math trump most of these so called experts.  Remember how some experts predicted Russian GDP to drop 10% in 2015? That was 2014 articles.  In the end, these people make no difference to reality but simply try to pander to those ignorant enough to believe.

Medvedev to discuss economic development action plan with gov

sepheronx wrote:

A Different Voice wrote:Saw this post on Sputnik News and was a bit confused about what Medvedev was saying in it.

10% cut in gov. salaries for 2016

Is he saying all federal employees got a 10% salary cut in 2015 and that they will get another 10%  cut in 2016?  I assume what is meant is that these cuts will only apply to relatively high level federal government employees and not all federal  employees.

Thank god.  Back in the day, federal/state employees were not supposed to make this ridiculous amount of money as they were the "people's people".  But now they make so much money per year, that all other options for a job is not considered good or livable.

Good news.  Will salve a lot of money, as there are a lot of "politicians" in the country (especially after making it easier to start a political party).

According to the Labor Minister Russians' real (inflation adjusted) wages declined 9.5% in 2015. That's pretty shocking and makes life tough for the average Russian, regardless of import substitution, etc.

Ouch! 9.5% reduction real wage reduction in 2015

Still, for the federal employees affected a 10% nominal (non-inflation adjusted) wage cut for 2015 plus another 10% nominal wage cut for 2016 sounds pretty brutal as a percentage drop after factoring in inflation.  That'll be in the neighborhood of a 40% reduction to their real wages in 2 years.  

I don't care about the super wealthy in Russia. They are doing great even now. I hate what is happening to the non-rich, the working people, the pensioners and the kids. I know things will get better eventually, but when they do we'll be looking back at a 5 year period with an average annual GDP growth of 0.5% or so. Lost years for lots of people.

Real wages drop is calculated with inflation. Not added in.

We here on the forums were calculating wage drop at inflation so figure was 16% and that brought wages to 2007 level.  If dropped by 9% then it brings it to roughly 2009/10 level.

But the thing that bugs me is why are we not doing the same calculations here or in other countries? Mostly no one accounts inflation as wage droppings.  I mean, I technically became poorer by roughly 2% but in Canada we dont call it that.

And yes, in these times, rich people will get richer as they have the finances to start the productions/jobs needed.
As for growth, there is no such thing as infinite perpetual growth in nature.  Essentially the days of easy money is gone and real work is needed.  Reorientating an economy takes years.  It took Russia 20+ just to get off of the soviet system and even that isnt fully complete.  It will take years before import substitution bears fruit.  But this is the necessities unless you want a country burdened with high debt and counting illegal activity like drugs and prostitution in the gdp calculations like Italy and UK did.

Capital outflow from Russia in 2015 totals $57 bln — official

More:
http://tass.ru/en/economy/856230

The State Duma has made recommendations for economic growth

For export through "Russian Alibaba» reset the income tax

Western sanctions on Russia have 'zero political outcome' & result in lost profits – Medvedev

https://www.rt.com/business/332372-russia-europe-sanctions-medvedev/

A Different Voice wrote:

sepheronx wrote:

A Different Voice wrote:Saw this post on Sputnik News and was a bit confused about what Medvedev was saying in it.

10% cut in gov. salaries for 2016

Is he saying all federal employees got a 10% salary cut in 2015 and that they will get another 10%  cut in 2016?  I assume what is meant is that these cuts will only apply to relatively high level federal government employees and not all federal  employees.

Thank god.  Back in the day, federal/state employees were not supposed to make this ridiculous amount of money as they were the "people's people".  But now they make so much money per year, that all other options for a job is not considered good or livable.

Good news.  Will salve a lot of money, as there are a lot of "politicians" in the country (especially after making it easier to start a political party).

According to the Labor Minister Russians' real (inflation adjusted) wages declined 9.5% in 2015. That's pretty shocking and makes life tough for the average Russian, regardless of import substitution, etc.

Ouch! 9.5% reduction real wage reduction in 2015

Still, for the federal employees affected a 10% nominal (non-inflation adjusted) wage cut for 2015 plus another 10% nominal wage cut for 2016 sounds pretty brutal as a percentage drop after factoring in inflation.  That'll be in the neighborhood of a 40% reduction to their real wages in 2 years.  

I don't care about the super wealthy in Russia. They are doing great even now. I hate what is happening to the non-rich, the working people, the pensioners and the kids. I know things will get better eventually, but when they do we'll be looking back at a 5 year period with an average annual GDP growth of 0.5% or so. Lost years for lots of people.

The problem with your conclusions ,is that you are completely unaware of the world
events happening today. And this is something really is disturbing . Because it shouldnt be that
way. Perhaps you never watch media in Russia? or read ever news papers? I saw Russians tourist interview in Egypt after they were told , Russia will cancel all flights to Egypt until security is fixed there and what was their replay of two Russian young girls in their 20's ages? that no problem ,they will go to Turkey.

If people like you were aware that RUSSIA IS on A STATE OF WAR since 2011 ,
and Proxy war ,lead by United States ,with with Turkey and Ukraine being the frontline.
that the conflicts that affects Russia are created by United States , that Russia face
a real economic warfare from the most powerful economy in the planet. So desperate are
Americans to sabotage Russia Economy , that they demanded Saudis to flood production of oil ,lower the oil prices and US also began to produce Oil with fracking selling more zero profit but lost , already 7 American shale companies bankrupt ..all for what? to damage Russia economy ,
because it profits a lot its budget from Energy sales. Then you have what?

lets summarize for disconnected people like you from the world what is
happening ?

United States is in a proxy war against Russia on different battlefields at the same
time. lets see.

1) Ukraine ,forcing 1 million of refugees in Russia all that cost money.
2)Paying pensions of the head of families to 2.5 millions new Crimeans ,something
that Russia war forced to do ,that is to annex Crimea or else have to deal with NATO military bases in Crimea not only a major humilitation for Russia but a very serious threat with nuclear capable warships and submarines so close to Russia.
3) Syria ,Forced Russia into aid Syria with military help to restore order ,because if ISIS/Alqaeda are allowed to take control of it ,it will allow Syria to be turned into the world recruitment center of terrorism and later Americans will use those terrorist against Russia.
and people like you ,( if it is true that is Russian). will later have to take a rifle to fight
the American hired terrorist ,in Russia territory . Either in Caucasus through Georgia or from Ukraine. or from tajikistan or from lithuane attacks on kalinigrad by Obama moderate head choppers/"freedom fighters" .pick your best.
4)Sanctions ,that pressure all US/Europe/NATO countries who have business in Russia
to leave. last numbers i saw was Russia lost about $100 billions in investments.
5)Oil war prices , by the prices of oil to fall from $100 to $30 .
that is 70% decrease in Oil prices ,money that Russia is no longer receiving.
6)This also impact indirectly Gas prices too.
7)Ukraine that now is under control of American ,no longer importing from Russia ,and is
blackmailing Russian Government with its violence on Donetsk, to give away energy very cheap.
8)Americans with the help of Jewish Elite ,who control 95% of world media ,are using its media to demonize Russia ,to made it look that is a third world country ,in a state of repression and
very outdated , that is going to collapse soon ,to dissuade any potential investor of investing in Russia.
9)Last but not least.. Americans and their Anti Russian allies ,like Turkey,Saudis,Ukraine,etc.
Are financing terrorism right in Russia territory , to damage its tourism. Shooting at tourist.

Why are terrorist in Russia so interested to target Russia Tourism?

http://sputniknews.com/russia/20151230/1032483055/gunner-attack-tourist-group-dagestan-russia.html

Because is an economic war. and Terrorist Handlers are being used as a weapon against Russia.

10)Now using Turkey to shot down Russian planes ,and US encourage Erdogan  into a direct war with Russia by blaming Russia for Russian planes shut down by TUrkey ,and by denying Russian reports that Erdogan helps ISIS.

So what else?.. we could talk about Biological warfare too against Russia from Americans,but i have no evidence yet of that..Is being discussed however in all Independent media ,that the signals are there ,but by coincidences the nations that more suffer from mysterious virus ,are BRICS nations. Coincidence eh? 

So when you sum all the things Americans are doing , this is not mentioning the shutdown
of Civilians planes with 300 passenger on board and sanctions on Russia defense industry and
Civilian Airliners ,so to make it more difficult for those business to operate in nations controlled
by American Imperialism. When you sum it all..  and you see the damage to Russian salaries
have been only reduced to 10%..

Then any sane person ,with basic reasoning will conclude , THAT RUSSIA IS DOING PRETTY DAM INCREDIBLY WELL . . is not collapsing and is holding the proxy war of the most powerful economy in the world.

And if you had any level of awareness of what Russia is facing today, Nothing less than soft
World war 3 by proxy .Not only targeting Russia ,not only its tourism and its banks and its business , But also its most important economic allies targeted too . Ie. CHina ,Venezuela,Brazil and middle east . and is creating Trade pact alliances with Asia ,so that Russia cannot take their business there either.

So when you really understand that Russia Government is facing today and not living in
another planet . that is that Russia will be justified. RIGHT NOW.
to declare a full scale war on United States even if that could end in the use of nuclear weapons. Not because of the economic warfare ,No no.. but because of their support to ISIS and other terrorism ,to exterminate any Christian and secular government from middle east, something that could kill millions of civilians . and because they show no intention to stop its alliance with terror.and no intention to stop attacking Russia. Then you will say.. wow..we are not at war yet,
and only 10% economic slowdown is pretty darn good ,that is amazing that Russia can face such level of warfare and continue operating. Any other nation in the world ,even United States will have collapsed  already if it was under similar economic warfare . If everyone started dumping dollars in Europe it will explode the US economic bubble and will become a third world nation overnight. That is Because they have ZERO RESERVES and a astronomical debt that cannot pay .. contrary to Russia. and have been relying in the world to carry on
their debt .because alone can handle it.. while Russia can handle its debt on its own. see the
difference?  Not so bad Russia Economy, it is actually really solid Economy. When you really
see what is happening.

had you been aware of what Russia Government is facing today. The most dangerous time
on their history .similar if not potentially worse than the week before that Hitler invaded Russia.
Then you will not be Criticizing or in any way shape or form the Russian government policies
and its economy.

People see shake of hands of Kerry and Lavrov and all that is merely Public Relations for cameras . THis is because Russia needs before any conflict start to be seen as a peacemaker
and not a troublemaker. This is what creates alliances that Russia will need in case a major
DIRECT full scale war start.  Means if Russia keeps a good image and the international opinion on their side ,it will not allow Americans to create a united front in Europe to isolate Russia from the world.  Putin have been pretty good in diplomacy in not allowing Americans to isolate Russia completely from Europe business. Kerry job is to fix the image of its nation in the world ,so he needs to be polite ,but behind the scenes US Pentagon and all US federal government is at war with Russia.. and the kremlin knows it.

Wake up dude , Russia IS at war right now. And the Economy Russia have today ,is the
economy of a nation facing a full scale war by proxy ,attacked its economy by the world most powerful nations that controls the world economy. So only 10% lower salaries temporary cut ,
after 70% oil prices being shut ,and after all the sanctions and economic warfare that americans are leading in so many fronts ,is PRETTY DAM GOOD performance .is Impressive to me . Shows Russia can handle it ,and that is strong and that it have what it takes to be a fully self sufficient nation. One it balance its budget and economy start to grow while being under western sanctions.  Any Russian that fully understood what their Nation is facing today. and full scale proxy war on many fronts by Americans. What it will do is raise a Russian Flag no matter the political party ,this is not about Putin ,but about Russia . Is attacked because American Hate strong competition that Russia is. and support the unity with their Government ,even if it was a Russian Liberal and not a Putin fan ,and not complain a 10% less salaries and not complaining the raise in taxed and not even complaining if they lose their Jobs. their Government needs to Balance its economy so it doesn't collapse that it will be worse. and will be good for Russian enemies. Even Russian liberals .most of them will not like their nation destroyed and disbanded.  Which is the goal of US policy against Russia. ie. to repeat another soviet union collapse is their intention. Break Russia economy by attacking ALL Russia economic interest in the world and all the nations important for Russia economy.

I admit that you did quite well there vann.  I would have removed the nuclear weapons part other than mentioning if attacked (which both Medvedev and Putin said they would use if attacked directly), but other than that, you are correct.

sepheronx wrote:I admit that you did quite well there vann.  I would have removed the nuclear weapons part other than mentioning if attacked (which both Medvedev and Putin said they would use if attacked directly), but other than that, you are correct.

Im also curious about what will happen if Russia pay 100% of all its Government debt ,
how that will change things for Russia economy. I never heard of a nation without debt..
that sounds like too good to be true to me.

But i think that the private debt will also matter too ,for Russia to really have a
real economic revolution no?

External debt can be paid off but without it, could affect Russias credit rating and Russia still obtain foreign loans.  I prefer no foreign loans and only those foreign loans should be involved only in foreign companies wanting to open up shop in Russia (but somehow still accounted as Russias private debt).  If they borrow from themselves, it can really increase domestic banks liquidity, which is good.

The World Bank report says M2 supply is 60 % of GDP , Is this correct ?

http://data.worldbank.org/indicator/FM.LBL.MQMY.GD.ZS

I wanted to compared with India but did not find similar data for % wise for India

A lot of countries are missing data.

Found it by end of 2014, India it was ~ 77 % of GDP , Lacks latest 2015 figure though

http://www.tradingeconomics.com/india/money-and-quasi-money-m2-as-percent-of-gdp-wb-data.html

for China the same data is 193 % of GDP

http://www.tradingeconomics.com/china/money-and-quasi-money-m2-as-percent-of-gdp-wb-data.html


BTW is larger M2 as % of GDP seems more liquidity and for china its 193 %

Japan is over 200%.

I've an article explaining nicely why China 'Debt Bomb' is More Like A Bottle Rocket.


Anyways

Could sanctions spur Russia's ascent to agricultural superpower?

Christian Science Monitor one of the few publications which strives for any degree of balance - and this is an excellent news -thanks to Fred Weir. The best Western reporter by far from a mainstream Western media agency in Moscow - which is actually unfair to him because the others are truly awful and he is actually a very good reporter.


In Moscow

Russian economy facing 4 key problems
12 February 2016 Alexey Lossan, RIR

The need for structural reform is being intensely debated in Russia. Leading Russian economists identified four main problems with the Russian economy during the Foreigners Life conference in Moscow from February 5 to 7.

http://in.rbth.com/economics/finance/2016/02/12/russian-economy-facing-4-key-problems_566905

People are getting impoverished faster than before

People in Russia are descending into poverty faster this time compared to recent crises in the Russian economy. In 2015, the amount of goods purchased by Russians had decreased by 10 percent. Even during the most serious crisis in the modern history of the country, in 1998, the figure (of final consumption of households) had fallen by only five percent, and by four percent after the global financial crisis in 2009.

There is another reason also why people are running out of money. Businesses are deliberately reducing wages in an effort to increase their own profits. In 2015, nominal wages grew by 4.6 percent, while company profits increased by an average of 49 percent. One of the reasons for this is the lack of effective trade unions to defend the rights of workers in Russia.

A free-floating exchange rate leads to inflation

Russia moved to a free-floating exchange rate in 2014, making the Russian currency value market-determined. Since then, the ruble has fallen against the U.S. dollar and the euro by 60 percent. Additionally, the value of the ruble is affected by fluctuations in oil prices. As a result, the ruble can fall or grow by as much as 20 percent in one month. Possible rate shifts are included in the price of all contracts in the country.

Economists estimate that the instability of the currency provides an annual inflation of 7 percent. In comparison, inflation in Russia amounted to 15.5 percent at the end of 2015.

In this situation, interest rates on bank loans, including those for the purchase of equipment, cannot be lower than 15-20 percent. It turns out that businesses just cannot afford to buy new equipment and expand production; and this is another big issue.

Companies are not buying new equipment

Compared to the crisis of 2008-2009, the figures for GDP and various industries in Russia at year-end 2015 did not show a catastrophic decline. For example, GDP declined by 3.7 percent compared to 7.9, the volume of construction fell by 7 percent compared to 16 percent, while the figures for railway freight have not changed at all.

According to economists, the bad news is that indicators that determine future economic growth; primarily investments; fell much more. Investment in fixed assets fell by 8 percent, while the import of equipment from abroad has decreased by as much as 38 percent.

As a result, equipment on average sees use of 14 years in Russia compared to seven years in the West, and about 20 percent of machines are way beyond their expected life span and should be discarded. Even the country's wealthiest companies; the oil and gas majors; are cutting back on their investments.

According to estimates by researcher Abel Aganbegyan, at a price of $35 per barrel, oil companies' investments will decrease by 20 percent, while Gazprom could postpone investments in the Power of Siberia pipeline, designed to carry gas from Russia to China.

Hopes for Chinese investment fail to materialize

Despite a variety of bold political proclamations, Chinese investments have yet to arrive in the Russian market. Some investors from China have in fact even begun to withdraw funds from Russia. China's Chengdong Investment Corp. decided on February 4 to sell its stake in the Moscow stock exchange.

Investors from India are likely to replace the Chinese. During the USSR era, a number of investment projects were set in place with India.

But what is most likely is an inflow of funds from Western capital markets. Many European countries have negative interest rates, meaning that money is almost worthless within the country, and investors are being forced to seek projects abroad. Russian borrowers, including the government, have always been disciplined and have typically paid their debts on time.

It is no coincidence that, on February 7, the Russian Finance Ministry sent proposals for the possible issuance of Eurobonds in 2016 to 25 foreign banks. The last time that Russia borrowed from the international markets was in Sept. 2013, when a total of $6 billion worth of bonds were sold.

This article is based on material prepared by participants of the Foreigner's Life forum: reports by researcher Abel Aganbegyan, Konstantin Korishchenko, the Central Bank's former deputy chairman, and Oleg Zasov, director of the Department of Macroeconomic Forecasting at Vnesheconombank – the country's key development institution.

So the guy who wrote this piece (of shit) article is probably either an outsider or working for an outside agency.  RBTH, not surprising really.

1) no they are not getting poorer faster.  Inflation was 12% yet person got poorer on average of 9%.  People were lucky that they got even a 4% raise or increase, you wont find anyone anywhere else looking at trying to meet inflation.  Wages now thus are higher than it was in 2007, which average Russian was more than doubled, if not tripled, in wealth compared to even 1998 standards.  I remember 2008 very well and remember how people and companies had to go to pawnshop lenders to get money.  They had an RT video on it.

2)Free float exchange rate was the best thing that happened.  It cushioned the blow of reduced oil prices, help kept companies afloat (hence helped them find that +40% profit increase) and really pushed for a new revolution in economic development and plans for Russia.  Why else is the agriculture industry boosting?

3)8% drop is barely anything.  Fixed assets is more than just "new equipment".  And lack of importing new equipment? Maybe that has more to do with sanctions numbnuts (writer).  And not just that, but it nearly isnt beneficial to purchase from abroad anyway.  There is a reason why Russias tooling industry is also growing (be it from foreign designs that are made in Russia, or own designs).

4) is the only one that is semi correct.  While there was hope from China, it seems China is bunkering down a bit in order to spur domestic demand for local made goods.  No worries, as there is far more countries in Asia to trade with that will eventually replace Europe overall (nations with far more consumers).  And Russia never said they will drop Europe entirely but look for other partners by turning east.