Russian Economy General News: #8

Nevertheless you tend to forget that USD is world currency we like or not ( I dont) . Russian internal B2B transactions were till recently based mostly on USD!!! Madness.
Russian companies and state alike have still many dues in USD.

I dont forget hence I said let CBR keep the minimum money needed in USD/T Bills as is needed for Business Transaction but dont keep a significant portion of Forex in T Bills.

There is no harm in investing in Chinese and Indian T bills , its as Risk Free as US T bills because the Risk is taken care by Government of these countries , Russia can keep significant portion of its Forex in Chinese and Indian Soveriegn Bond , Should be helpful even to build bilateral relations

Belousov estimated the cost of fulfilling Putin's instructions following the message

The implementation of President Vladimir Putin's instructions following the message to the Federal Assembly will require funds equivalent to 1.5% of GDP, the presidential aide Andrei Belousov told reporters.

"We have enough money. Now these calculations are being refined. Approximately we are talking about the value, if we talk about the sixth anniversary, about 1.5% of GDP, "Belousov said, answering the relevant question. " This is quite a lot, but maybe not fatally a lot," he said (quotes from Interfax)

According to the official, about two-thirds of the required amount will be received due to the acceleration of economic growth from 2% to 3.5-4% per year , the rest - thanks to savings. "Of course, there are such opportunities in the budget," he said.

In addition to defense spending, savings can be achieved by reducing budget spending on capital construction, Belousov said. "This is a big sphere, there are also about 600 billion rubles. annually, there too we can save, I think, somewhere tens of billions of rubles, at least, "he pointed out.

At the same time, Putin's assistant did not name specific figures, which are planned to be allocated for the implementation of instructions. "I do not want to name the sum now, so as not to frighten anyone. There are amounts. It's just a task that the government now has to solve, in the near future, "he concluded.

Maybe you know Austin, but what exactly did Putin state is the proposed methods needing the 1.5% of GDP for the 6 years? Was it infrastructure or what?

Seems like it. It's also a good thing that he seems quite convinced that Russia is going to reach an annual growth of 3.5-4%.


This is LOL:
https://www.rt.com/business/421478-russia-inflation-record-low-america/

Although that shows you once again that they're overshooting the target. Oh well, the rates are going down anyway, the trend is clear.

Putin instructed the Cabinet to ensure that Russia is in the top 5 economies of the world by 2024

http://www.interfax.ru/russia/603900

Moscow. 16 March. INTERFAX.RU - Russian President Vladimir Putin instructed the government and the Central Bank to ensure Russia's entry into the world's top five in calculating GDP at purchasing power parity, Russian presidential aide Andrei Belousov told journalists, commenting on the president's instructions following the message to the Federal Assembly.

"First of all, this is the entry or return of Russia to the five largest countries in the world in terms of purchasing power parity (PPP), which means that we must outrun Germany ( by 2024 - IF ) .The four countries that will be in front of us are the USA, China, Japan, India , and we must be the fifth, "he said.

"This is not a good wish, but a condition for realizing all other goals." Calculations show that reaching these rates will create additional financial revenues for the budget system that cover about half or even more of those additional needs that we will need to invest in health, education and so on, "- explained the presidential aide.

According to him, the additional needs are estimated in six years at about 1.5% of GDP and about 1% of GDP can be generated by accelerating economic growth.

"We have enough money, now these calculations are being clarified," he told journalists, answering the relevant question, about the size, if we talk about the sixth anniversary, about 1.5% of GDP.

"This is quite a lot, but maybe not fatally a lot," A.Belousov noted.

At the same time, about two thirds of these 1.5 percent of GDP will be generated through accelerating economic growth, and the rest - through savings, he said.

So making Russia 5th largest Economy of World outclassing Germany by 2024 , will this be possible ?

What % of GDP Growth is needed ?

Last forecaste of IMF 2017 and WB 2016 puts Russian GDP ppp at 6th place behind Germany

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

Sometimes I wonder how Japan maintains a 4th Position PPP by GDP for a country that has Debt to GDP Ratio of 250 % !

Austin wrote:So making Russia 5th largest Economy of World outclassing Germany by 2024 , will this be possible ?

What % of GDP Growth is needed ?

1) yes it is possible if growth rates will be high enough (I dunno but I guess 6-7% or more)

2) what's  more important this can be caused by radical change in apporach to economic growth. I presume all those Leaders of Russia stuff, technopolis  and Shoigu as head of FPI is kinda preparation.

Austin wrote:Last forecaste of IMF 2017 and WB 2016 puts Russian GDP ppp at 6th place behind Germany


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Sometimes I wonder how Japan maintains a 4th Position PPP by GDP for a country that has Debt to GDP Ratio of 250 % !

I guess the trick with Japan is that Japanese debt paper is bought almost exclusively by Japanese. Besides Japan bought over 1 trillion of  US debt so in face they are on +  :-)

Austin wrote:
I dont forget hence I said let CBR keep the minimum money needed in USD/T Bills as is needed for Business Transaction  but dont keep a significant portion of Forex in T Bills.

There is no harm in investing in Chinese and Indian T bills , its as Risk Free as US T bills because the Risk is taken care by Government of these countries , Russia can keep significant portion of its Forex in Chinese and Indian Soveriegn Bond , Should be helpful even to build bilateral relations

First things first make sure inter-Russian and transactions with biggest/ and or geo-strategic partners are in national currencies. Vide: China, India is happening now AFAIK. Iran is crude oil - Russian goodies barter.

I am glad in this discussion some one agrees with me of Russia dropping of US T bills as they can be taken away

Russia can take away $ 100 billion
Despite the possibility of freezing, Moscow continues to keep money in US securities

http://svpressa.ru/politic/article/195524/?utm_source=finobzor.ru

Now central bank will probably be pressed after elections to drop rates, cause most in Russia are fully aware of it. Plus it looks like Russia is slowly selling it's US bonds. But if the US plans to freeze it, it takes time to do so, which would give Russia maybe 24hrs max to sell it.

What's funny though, as EU and US increase the pressure on Russia, Russian sale of bonds and stocks are increasing by these very same countries business class. Really goes to show that the business men at the end of the day will not follow the bs of their governments.

kvs wrote:If Putin wants Russia to move ahead of Germany then he needs to get rid of the clowns running the CBR.   There not going to be
any 3+% growth with the insane prime rate over 7%.   Russia will be lucky to have 1+%.

Just my opinion: Yes Putin IS very conservative but  unlikely any of his advisers nor bloggers he HAS responsibility. Flushing money to economy via banks is mostly for SMEs and individuals. SO they get money and what? there is almost nothing Russian on consumer market made in Russia. So they start buying imported goodies. This very efficiently kills economy and causes inflation too.

First ypu need to make healthy foundations for economy to grow otherwise you might end uo in 2009 or 1999.

n Russia where there were too many banks. Most of them stealing money from state  or customers or both.  Virtually no financial  instruments to make capital market run. Those are  kind of financial infrastructure for economy. Who is going to fiance startups? who is going to scale them up?either funds or stock exchange.  
Add to this  targeted programmes for food security, infrastructure and economical regulations "SME friendly" and et voila money can pour in. But isnt it what Putin is doing?

Austin wrote:I am glad in this discussion some one agrees with me of Russia dropping of US T bills as they can be taken away

Russia can take away $ 100 billion
Despite the possibility of freezing, Moscow continues to keep money in US securities

Ad you believe every article of every drama queen? Do you think that journalist and blogger with no economic background and no knowledge of behind scenes realities know more than Putin? And what if Russia took those money and lost half of it due to western media aggression against Russian economy? Please note any blogger or journo bears NO RESPONSIBILITY if you apply their advises.

They want only their columns to be read. And earn money in currency that is stable and with low inflation.



BTW

About author or column: He was born in Murmansk in 1975. Two decades later he entered the Literary Institute. A.M. Gorky, after graduating, he suddenly stayed in Moscow.

In journalism since 2003. He worked in Trud, in Literaturnaya gazeta, in the Moscow Department of Culture. In the "Free Press" since 2011.

Professions are most grateful for having visited interesting places, where otherwise it would be difficult to get there. Geography of business trips - from Kamchatka to Dagestan and Kaliningrad.

miketheterrible wrote:Now central bank will probably be pressed after elections to drop rates, cause most in Russia are fully aware of it.  Plus it looks like Russia is slowly selling it's US bonds. But if the US plans to freeze it, it takes time to do so, which would give Russia maybe 24hrs max to sell it.

What's funny though, as EU and US increase the pressure on Russia, Russian sale of bonds and stocks are increasing by these very same countries business class.  Really goes to show that the business men at the end of the day will not follow the bs of their governments.

It's not only funny but proof that there is no such notion in financial markets as patriotism but only profit.

As for t-bods I am sure that all risks were taken into consideration. Putin acts very prudent but is no idiot. As for CBR well you cannot keep money in bank without investing nd have growing economy. The only question is how well will it work? What changes after elections? IMHO if-there is really any pro western lobby in govt then the more external pressure the easier will be to remove them after elections. I mean the day after tomorrow

Surely politics should now focus to growth financed from internal sources.

miketheterrible wrote:Now central bank will probably be pressed after elections to drop rates, cause most in Russia are fully aware of it. Plus it looks like Russia is slowly selling it's US bonds. But if the US plans to freeze it, it takes time to do so, which would give Russia maybe 24hrs max to sell it.

What's funny though, as EU and US increase the pressure on Russia, Russian sale of bonds and stocks are increasing by these very same countries business class. Really goes to show that the business men at the end of the day will not follow the bs of their governments.

The only money that CBR should invest in T-Bills is what they can afford to loose.

Its like gambling in casino , the only money you should gamble with is what you can afford to loose.

I would say Russia does not need more than 20-25 Billion USD in T bills to take care of export needs and it can afford to loose the money without causing massive upheavel in its Forex

The current investment in US T Bills in current political climate is insane. CBR is just gambling with Russian Tax Payers money

Austin wrote:Last forecaste of IMF 2017 and WB 2016 puts Russian GDP ppp at 6th place behind Germany

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

Sometimes I wonder how Japan maintains a 4th Position PPP by GDP for a country that has Debt to GDP Ratio of 250 % !

I think those are actually outdated figures. They updated their methodology or something and Russian PPP GDP was boosted by quite a bit recently, as well as many other countries. You can see that if you go individual country pages on Wikipedia. Russia is very close to 30K per capita already.

So if Hellevig is correct here:
https://www.awaragroup.com/blog/despite-sanctions-russias-gdp-shoots-over-4-trillion/

Russia will potentially overtake Germany by 2020. Certainly by 2024, no question about that. I think it actually already happened for a year in 2013 (IIRC), just before the recession.

German economic growth is particularly slow as well. Russia doesn't need some ridiculous 6% growth rates, which are probably impossible anyway. 3%+ would be more than enough, and to actually to just overtake Germany even slower growth would be enough.

So Russia overtaking Germany is pretty much inevitable and it might even happen earlier than most people realize. Maybe already in 2018-19.

Austin wrote:Putin instructed the Cabinet to ensure that Russia is in the top 5 economies of the world by 2024

http://www.interfax.ru/russia/603900

Moscow. 16 March. INTERFAX.RU - Russian President Vladimir Putin instructed the government and the Central Bank to ensure Russia's entry into the world's top five in calculating GDP at purchasing power parity, Russian presidential aide Andrei Belousov told journalists, commenting on the president's instructions following the message to the Federal Assembly.

"First of all, this is the entry or return of Russia to the five largest countries in the world in terms of purchasing power parity (PPP), which means that we must outrun Germany ( by 2024 - IF ) .The four countries that will be in front of us are the USA, China, Japan, India , and we must be the fifth, "he said.

"This is not a good wish, but a condition for realizing all other goals." Calculations show that reaching these rates will create additional financial revenues for the budget system that cover about half or even more of those additional needs that we will need to invest in health, education and so on, "- explained the presidential aide.

According to him, the additional needs are estimated in six years at about 1.5% of GDP and about 1% of GDP can be generated by accelerating economic growth.

"We have enough money, now these calculations are being clarified," he told journalists, answering the relevant question, about the size, if we talk about the sixth anniversary, about 1.5% of GDP.

"This is quite a lot, but maybe not fatally a lot," A.Belousov noted.

At the same time, about two thirds of these 1.5 percent of GDP will be generated through accelerating economic growth, and the rest - through savings, he said.

This is stupid. For start Putin telling Medvedev's government that he wants Russina economy to grow is equivalent of leaving the keys of the car to first random hobo on the street and telling it to park your car. Following that there is ignorant drivel how there must be economic growth to facilitate increase in state expenditures, which is exactly upside down of how it actually works, you need increase of state expenditures to facilitate growth. This is completely insane, those people don't have a vaguest idea what they are doing.

Kimppis wrote:

German economic growth is particularly slow as well. Russia doesn't need some ridiculous 6% growth rates, which are probably impossible anyway. 3%+ would be more than enough, and to actually to just overtake Germany even slower growth would be enough.

So Russia overtaking Germany is pretty much inevitable and it might even happen earlier than most people realize. Maybe already in 2018-19.

Probably deliberate choice of easy target because of incompetent economic polices even that will probably end up too hard mark to reach.

How is Germany an easy target? It is the largest economy in Europe and 5th largest in the world (in PPP). Above Germany, there are only the behemoths China, USA and India and also Japan.

Russia has (slightly) less than 2 times the population of Germany, so reaching those kind of levels is actually really quite impressive. To overtake Japan (which will probably happen in the coming decades) would require achieving Japanese-level average living standards, because Japan's population is not much smaller than Russia's (although Japan's population is quite rapidly declining).

Btw, in comparison China's population is like 4 times larger than the US. So by your logic, Chinese economy must be really unimpressive, considering that China only became the largest economy in the world (PPP) in around 2014 (?). Russian per capita GDP is also still considerably higher than China's. But in the Western propaganda imagination, Russian living standards are somehow really bad or something, I don't even know...

So in a nutshell, once Russia finally overtakes Germany, this time permanently, it will become the 5th largest economy in the world and the largest in Europe in purchasing power parity.

Your narrative is a "little" too pessimistic. Russian economy has overall developed well since around 2000.

Kimppis wrote:How is Germany an easy target?

You sad it yourself, they are stagnant, Russian economy was already ahead of it not to long ago, before Nabiullina started to fuck with it really bad, and even at this time German economy is only about tenish % ahead of Russia in PPP terms.

Also > 6% annual GDP growth for Russia is perfectly achievable, all that is required is that key Russian economic institutions not be controlled by pack of treasonous incompetent crooks. With > 6%/annum of growth Russia could easily achieve Japan level of PPP GDP in the next decade. Alas Putin either has no intelligence or balls to do what must be done to get to that goal.

Interview: Glazyev: cryptorough helps to circumvent sanctions

https://www.gazeta.ru/business/2018/03/19/11688751.shtml

Russia Bonds Are Poised to Come off the Junk Heap

https://www.bloombergquint.com/business/2018/02/23/russia-bonds-are-poised-to-come-off-the-junk-heap

Public sector borrowing as a proportion of gross domestic product is, at 12 percent, very low relative to other countries.

External debt has fallen by a quarter to $540 billion and Russia's foreign currency reserves have stabilized at $430 billion. Inflation has plunged to a record low of 2.2 percent from a peak of close to 17 percent three years ago.

Good Article on UK Debt issue

Spring Statement: Is the chancellor right that debt is shrinking?