Russian Economy General News: #9

Pundits Predicting Panic In Emerging Markets

https://valuewalkpremium.com/2018/06/pundits-predicting-panic-emerging-markets/

Russia does not need to borrow from abroad to finance its consumption and investments. It sells more in oil and gas to its European neighbors than it buys in goods from the rest of the world. With little external debt, ample FX reserves, and a large current account surplus, the risk of a Russian financial crisis is remote (especially with the price of oil hovering between $60 and $80 a barrel).

Russia win Spain on penalties (3 - 4) and proceeds to Quarterfinals!!!

Austin wrote:Pundits Predicting Panic In Emerging Markets

https://valuewalkpremium.com/2018/06/pundits-predicting-panic-emerging-markets/

Russia does not need to borrow from abroad to finance its consumption and investments. It sells more in oil and gas to its European neighbors than it buys in goods from the rest of the world. With little external debt, ample FX reserves, and a large current account surplus, the risk of a Russian financial crisis is remote (especially with the price of oil hovering between $60 and $80 a barrel).

Since Russia manufactures most of the things needed for its domestic consumption, any loss of access to external products
will result in import substitution. This is something western leaders and pundits do not understand. Russia is not an oil
and gas exporting banana republic like Saudi Arabia. Russia does not need foreign revenues and imports to maintain its economy.

Russia ramps up yuan & gold share in its reserves

https://www.rt.com/business/431610-yuan-gold-russia-reserves/

Unless my math is off, government projecting a GDP of 98.22 trillion rubles for 2018. The GDP in 2016 was reported as 84.12 trillion rubles.

http://tass.com/economy/1011921

franco wrote:Unless my math is off, government projecting a GDP of 98.22 trillion rubles for 2018. The GDP in 2016 was reported as 84.12 trillion rubles.

http://tass.com/economy/1011921

With a 10% GDP deflator that translates into 6.1% real growth. But don't expect the CBR and the Russian Ministry of Finance to produce
such figures.

A 10% GDP deflator is reasonable even if the PPI is over 15% as long as the CPI stays under 3%, which is a given for 2018.

2018 GDP would be 96.34 trillion based on figures quotes in tass link

Austin wrote:2018 GDP would be 96.34 trillion based on figures quotes in tass link

Sure, then we have 4.1% GDP growth. Not the 1.4% being forecast.

You should try once in your life to do the math.

kvs wrote:

franco wrote:Unless my math is off, government projecting a GDP of 98.22 trillion rubles for 2018. The GDP in 2016 was reported as 84.12 trillion rubles.

http://tass.com/economy/1011921

With a 10% GDP deflator that translates into 6.1% real growth.   But don't expect the CBR and the Russian Ministry of Finance to produce
such figures.

A 10% GDP deflator is reasonable even if the PPI is over 15% as long as the CPI stays under 3%, which is a given for 2018.

That increase would be over 2 years.

Austin wrote:2018 GDP would be 96.34 trillion based on figures quotes in tass link

Still getting the 98.22...

16.6 trillion budget = 16.9% of GDP = 98.22

Russia Dumps Treasuries for Gold

franco wrote:

Austin wrote:2018 GDP would be 96.34 trillion based on figures quotes in tass link

Still getting the 98.22...

16.6 trillion budget = 16.9% of GDP = 98.22

Thanks for the correction about 2016 vs 2017. So the per year change would be the square root of the number I posted
or 3.0%. The PPI is not 20% in Russia for the reported growth statistics to be valid.

The Ministry of Finance forecasts the growth of budget expenditures for a number of items in 2020-2021

https://ria.ru/economy/20180708/1524190969.html

Budget Expenditure

Thus, expenditures under the item "National Defense" for 2018 are planned at 2.797 trillion rubles, in 2019 - 2.783 trillion rubles, in 2020 - 2.860 trillion rubles, in 2021 - 2.981 trillion rubles.

The cost of national security and law enforcement will grow from year to year - in 2018 they will amount to 2.105 trillion rubles, in 2019 - 2.182 trillion rubles, in 2020, 2.256 trillion rubles, in 2021 - 2.320 trillion rubles.

РИА Новости https://ria.ru/economy/20180708/1524190969.html

Kudrin estimated GDP growth rates for entering the top five largest economies

Scenario conditions (socio-economic development of Russia - Ed.) Provide an average growth rate of 2.6% to 2024. This, of course, is not enough to make our economy the fifth largest in the world. we need an average growth rate of 3.5%. "While in these scenarios, this can not be traced," Kudrin said, speaking at the State Duma hearings on the draft guidelines for fiscal and taxation policies.

РИА Новости https://ria.ru/economy/20180709/1524218424.html

ekhm how did he calculate this? How Russia in terms of PPP can overgrow Japan with such growth rate? or my math sucks?

kvs wrote:

Since Russia manufactures most of the things needed for its domestic consumption, any loss of access to external products
will result in import substitution.   This is something western leaders and pundits do not understand.   Russia is not an oil
and gas exporting banana republic like Saudi Arabia.    Russia does not need foreign revenues and imports to maintain its economy.  

It is not entirely true. Russia tries to substitute all strategic directions but is not planning to produce all (bananas? smartphones? Mercedes-Benz? ) - this would be economical madness. As for Austin - in his quote was actually a statement that Russia with its reserves and balanced budget is fairly immune to crisis.


BTW and interesting what all specialists talking about spend all reserves will say now? Trump suck all $ out of emerging markets and Russia would be left without reserves...

Kudrin just makes a lot of statements. He really doesn't know what he is doing and that was obvious over the years. His job is to make sure that money is spent correctly. But he still loves to talk about economics lol

http://rostec.ru/news/novikombank-uvelichil-finansirovanie-predpriyatiy-malogo-biznesa-v-tri-raza/

The Bank has increased financing of small business enterprises three times

Novikombank strengthens position in the segment of lending to small and medium enterprises (SMEs). The volume of Bank financing of SMEs in the first quarter of this year, three times higher than in the same period of 2017. Simultaneously, the increase in the number of enterprises using cash and settlement services in Novikombank. According to experts, a major state-owned banks are the driver of SME lending in the current year.

For the first quarter of 2018, the Bank has financed enterprises SMEs worth about 1 billion rubles. According to the results of the same period of 2017 this figure stood at 285 million rubles.

Dramatically increasing the number of SMEs benefiting from settlement and cash service of Novikombank. So, for the first quarter of 2018 have over 200 Bank accounts. All currently units of the Bank provides services to more than 700 SME clients.

Novikombank implements the program of support of industrial enterprises of small and average business in 2013. In this segment of credit the organization has a number of competitive advantages due to strategic cooperation with the state Corporation rostec.

"The Bank is familiar with the business, Rostec has the opportunity to objectively assess the market position of suppliers and contractors relating to the SME segment. The Bank forms its loan portfolio through loans to small and medium enterprises, which confirmed the high quality products and good technical condition of production base, commented the Chairman of the Board of Novikombank Elena Georgieva. – Thus, the Bank minimizes the risks of its activities, and its customers have access to banking products of the highest quality".

The government will discuss a plan for the growth of capital investments in Russia

https://ria.ru/economy/20180712/1524418027.html

"The meeting is scheduled to consider ... questions about the plan of action to accelerate the growth rate of investment in fixed assets and increase up to 25% of their share in the gross domestic product," the report said.

The Minister of Economic Development Maxim Oreshkin said in June that the growth of investments in the Russian economy from the current 21% to 25% of GDP by 2024 is possible only if the growth of bank lending, investing pension savings and reducing capital outflows. According to him, investments of 0.5% of GDP will be financed from the budget through the Development Fund. Another 0.5% should give rise to the bank's corporate loan portfolio and investments in bonds.

Oreshkin noted that the source will also be a reduction in capital outflow - this will give an investment of 0.7% of GDP. Another 0.6% will be invested at the expense of corporate sector profits, and 0.5% of GDP should come from the newly created mechanisms of long-term savings of the population, the same pension capital, he added. The Minister noted that the increase in financing of investments should not lead to an increase in inflation.

Will 25 % be good enough if I am not wrong the figure for china is 50 % and India is 30 %

Great News

Russia wins Macro World Cup – Bank of America

https://www.rt.com/business/432689-russia-emerging-markets-world-cup/

Latest figures for GDP Nominal 2017 from World Bank

http://databank.worldbank.org/data/download/GDP.pdf

CB: Russia's external debt for the first half of the year decreased by 6.3%

https://sdelanounas.ru/blogs/109547/

The external debt of the RF since the beginning of the year decreased by 32.6 billion dollars, or 6.3%, and amounted to July 1, 485.5 billion dollars, according to the Bank of Russia.

As of January 1, the external debt of the Russian Federation was 518.103 billion dollars.

VTB has prepared proposals for the de-dollarization of the Russian economy


https://ria.ru/economy/20180713/1524537274.html

"Our experts prepared a whole draft of proposals aimed at further expanding the use of the ruble in international settlements in order to develop the Russian market for the placement of Eurobonds, shares and the creation of other derivatives that are currently used only in the West. tools, "- said Kostin.
In his view, this will further protect the Russian financial sector from external factors. "In general, it will give a new impetus to the development of the financial sector," VTB said.

Kostin suggested that the head of state be instructed to consider proposals to the relevant structures, the government and the Bank of Russia. "And, if possible, support the policy of further dedollarization and de-orphanization of our economy," said VTB head Vladimir Putin.
The head of the state bank also noted that the population of the Russian Federation since the beginning of the year shows less interest in dollar deposits and loans for ruble ones.

Kostin has repeatedly spoken out for the de-dollarization of Russia's financial sector. So, in late May, he supported the additional restriction of foreign currency lending, which the Central Bank was thinking about at that time. Later, the regulator increased the risk factors for foreign currency loans for purchasing real estate up to 150% from 130%, for exporters - up to 110% from 100%, for other requirements in foreign currency - up to 130% from 110%.

РИА Новости https://ria.ru/economy/20180713/1524537274.html

Looks like VTB will end up being the leading bank in Russia since Sberbank likes to "play it safe" in other words, operate whatever outsiders want.

Sberbank is more like the "Sparkasse" or "Volksbank" in Germany, a bank for normal people with normal incomes = small savings, loans and so on. VTB is mostly a commercial bank. In my opinion a bank like this should lead the way in such matters.

Hole wrote:Sberbank is more like the "Sparkasse" or "Volksbank" in Germany, a bank for normal people with normal incomes = small savings, loans and so on. VTB is mostly a commercial bank. In my opinion a bank like this should lead the way in such matters.

Indeed. And all dollars cannot be removed from the Russian economy since citizens will be allowed to have dollar accounts.

kvs wrote:

Hole wrote:Sberbank is more like the "Sparkasse" or "Volksbank" in Germany, a bank for normal people with normal incomes = small savings, loans and so on. VTB is mostly a commercial bank. In my opinion a bank like this should lead the way in such matters.

Indeed. And all dollars cannot be removed from the Russian economy since citizens will be allowed to have dollar accounts

Wonder why that is needed , In BRICS Russia is the only country to have full capital account convertibility .....Not Needed ..... puts pressure on Rouble

CBR will have to keep nearly equal amount of USD in circulation as Rouble is so that citizen have the flexibility to either keep USD or Rouble ...equalivent to M2