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    Russian Economy General News: #1

    Viktor
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    Post  Viktor Tue Jul 16, 2013 10:21 am

    Im little low on time to find that articles but remember reading that during 2012 about 450 new factories where built in Russia. During 2011 close to 650 new factories where built in Russia. Now that figure includes from small ones up to the largest ones but nevertheless they all have one thing in common. They employ workers and diversify economy while creating new opportunities for new factories. Factories attract factories same as money attract money.
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    Post  sepheronx Tue Jul 16, 2013 10:31 am

    Austin wrote:Some bad news on Economic Front

    The Russian economy will continue to stagnate

    The Russian economy continues to stagnate despite the rise of the existing imbalances, the emergence of new sources of instability, including those under the influence of inconsistent policies. This is the conclusion of the National Intelligence Research Institute of the Higher School of Economics / HSE / published in the new bulletin "Comments on the state and business."

    According to analysts, published by Rosstat assessment of GDP for the first quarter of 2013 does not allow to judge about the real reasons for the growth.

    "All the 1.6 percent growth in the economy obtained by the statistical discrepancy, with a sharp deterioration in the dynamics, both external and domestic / consumer and investment / demand" - written by analysts HSE.

    The main obstacles to the economic growth of the country's experts have called the balance of payments in the face of shrinking exports, capital flight and the weakening of the ruble, which will lead to higher prices for imported goods and, as a consequence, higher inflation.

    In addition, the source of the imbalance in the Russian economy, according to analysts HSE is a higher wage growth than the growth of labor productivity.

    "Not supported by economic growth higher wages is one of the reasons for declining profits of enterprises, which in turn constrains how their own sources for investment in the economy, as well as receipts from income tax, from which mainly affects the same regional budgets" - experts say.

    Minister of Economic Development does not expect a recession by the end of the year

    Yuzhno-Sakhalinsk, on July 16. / Itar-Tass Petrov /. Economic Development Minister Alexei Ulyukayev does not expect a recession by the end of the year. "Recessions do not expect," - he told reporters.

    "Moreover, in the second half of the year, I think the growth will be more than the first," - he added.

    By the end of June, the growth rate of GDP in Russia in January-May 2013 was 1.8 percent. For the same period in 2012, the figure was 4.5 percent. As previously stated the former Economic Development Minister Andrei Belousov, "the main reason for the decline of economic growth - the dynamics of investment, investment activity has fallen sharply."

    This was expected to happen really. People demand more money, and even in fields where they don't really deserve more money. As well, capital flight was a major issue, and even though many politicians are pissed about the recent bill that passed about limiting officials with overseas property, it was much needed to help fight corruption.

    Then there is the problem with the shadow economy consisting of 20% of GDP being lost per year because of personal greed. As for dynamics of investment, that is total bullshit. I mean, maybe there is a lower in dynamics of investment, but investment in Russia has been the highest it ever has been since forever. If you gone through my other thread, you will even be able to pinpoint it out yourself.

    What will happen, I think, with the demand in increase in workers pay and not really high productivity, is owners moving to a more automated approach, which is already happening. Uomz going to build an automation plant for making robotics, that will only employ 80 people but produce over 700,000 parts? Yeah, that is the future and many Russian's are going to feel the pain.
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    Post  sepheronx Tue Jul 16, 2013 10:34 am

    Putin Slams Far East Officials Over Slow Development

    MOSCOW, July 16 (RIA Novosti) - President Vladimir Putin criticized the federal government and local authorities Tuesday over their failure to ensure effective development of Russia’s Far East, Rossiya 24 TV Channel reported.
    “Are you going to work, or what?” he asked participants at a development meeting for the Sakhalin region, which he said has everything needed to become a global level energy center.
    Only 20 percent of regional development targets set in December have been met, Putin said. He called on officials to get moving without delay, particularly in problem areas like transport and energy.

    Rosneft Ready to Invest $30B in Far East

    YUZHNO-SAKHALINSK, July 16 (RIA Novosti) – Russia’s state-controlled oil giant Rosneft is ready to invest 1 trillion rubles ($30 billion) in the development of East Siberia and the Russian Far East in the next five years, Rosneft CEO Igor Sechin said Tuesday.
    Sechin made his statement during a visit to Rosneft’s Orlan oil platform in the Sea of Okhotsk off Sakhalin Island. Sechin was speaking in a video conference with President Vladimir Putin who was near Sakhalin monitoring military exercises.
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    Post  sepheronx Tue Jul 16, 2013 10:55 am

    My statement about investments stemmed from something like this:

    St. Petersburg at SPIEF attracted about 130 billion rubles of investments

    PETERSBURG, June 21. / Correspondent. Itar-Tass Queen /. St. Petersburg SPIEF 2013 attracted about 130 billion rubles of investments. Such data led reporters the governor Georgy Poltavchenko.
    "Last year, the forum was raised around 91 billion rubles, so this year is progress, but the main thing - it's the economy and create jobs," - said Poltavchenko.

    Then there are these signs of economy:

    Rosstat: the unemployment rate in May fell to 5.2%

    Under the terms of the International Labour Organization (ILO), in March - May, the lowest unemployment rate in the federal districts marked in the Central Federal District (3.3%), the highest - in the North Caucasian Federal District (13.3%).

    Decreased imports of passenger cars and commercial vehicles in Russia

    Imports of passenger cars in Russia in January - April 2013 decreased by 8.2% to 297.2 thousand vehicles. According to the Federal Customs Service of Russia, during the period in Russia was imported cars by 5 billion 929.1 million . dollars. Of them from foreign countries - 277,1 thousand cars to 5 billion 785.1 million and $ 20.1 thousand cars on the $ 144 million - from the CIS countries.

    OECD: Russia - the largest economy in Europe

    June 2 Organization for Economic Cooperation and Development (OECD) published on its website the economic results of 2012 for member countries and candidate countries for accession. Russia's GDP at purchasing power parity amounted to 3.38 trillion. U.S., Germany - 3.30 trillion. U.S.. Thus Russia has become Europe's largest economy for the first time since the collapse of the Soviet Union.

    Gives me indication that times are changing and this low GDP growth may be insight to some mighty changes. Developing countries usually have high growth rates while developed ones do not.
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    Austin


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    Post  Austin Tue Jul 16, 2013 2:19 pm

    sepheronx wrote:What will happen, I think, with the demand in increase in workers pay and not really high productivity, is owners moving to a more automated approach, which is already happening.  Uomz going to build an automation plant for making robotics, that will only employ 80 people but produce over 700,000 parts?  Yeah, that is the future and many Russian's are going to feel the pain.

    The way to ensure growth is to follow what US did during its crisis period , Allow business and enterpruners Cheap money at low interest rates so that it stimulates demand.

    Europe has been a failure because it stuck to Austerity model.

    Russian Gov is nose hard and tries to keep debt low , I would say trade off is to let Debt grow to 20-25 % from current 11 % and let bank give credit at 2 % and let government invest in infrastructure project.

    10 % of GDP today stands at $ 200 billion dollar , its good to invest such money and this will help stimulate growth and also maintain balance in debt and growth
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    Post  medo Tue Jul 16, 2013 3:01 pm

    Austin wrote:
    sepheronx wrote:What will happen, I think, with the demand in increase in workers pay and not really high productivity, is owners moving to a more automated approach, which is already happening.  Uomz going to build an automation plant for making robotics, that will only employ 80 people but produce over 700,000 parts?  Yeah, that is the future and many Russian's are going to feel the pain.

    The way to ensure growth is to follow what US did during its crisis period , Allow business and enterpruners Cheap money at low interest rates so that it stimulates demand.

    Europe has been a failure because it stuck to Austerity model.

    Russian Gov is nose hard and tries to keep debt low , I would say trade off is to let Debt grow to 20-25 % from current 11 % and let bank give credit at 2 % and let government invest in infrastructure project.

    10 % of GDP today stands at $ 200 billion dollar , its good to invest such money and this will help stimulate growth and also maintain balance in debt and growth

    I agree with Russian government to keep dept as low as possible. Any increase in debt could soon become very sharp sword over your head ready to cut. Current russian grow is lower and is more natural, based on earned money, not on borrowed one. For Russia is important that more people work in real sector and earn money and than buy more products, what will increase domestic market and at the end increase production. Situation in Russia is different comparing to India or China. Russia have many very rich regions, which are now still without connection with the rest of the World. Russian Eastern Siberia and Far East are big reserves for Russian grow. Building roads and railroads as well as airports to connect them with other regions and sea harbors will bring their products and materials to others as well as products from others to them.
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    Post  Austin Wed Jul 17, 2013 1:03 am

    Consider the simple fact Among the BRIC country the public debt of China is 50 % , India is 70 % ,Brazil is 55 % and Russia is 11 %

    If Russia increases its Public Debt by 10 % to around 21 % it will have $200 billion in money for Infrastructure and Public Utility Services that will help boost growth and boost GDP figures.

    Even at 21 % Public Debt , Russia debt will still be lower among BRICS.

    Russia has riches but those cannot be tapped immediately , It can pay back the money once these resources are tapped say in a decade or two from now.

    Money is no good if its not working for you and helping you , Low Debt is no good if its not generating growth.

    Russia cannot access Cheap money from European market due to low credit rating something deliberately done by Western clones like S&P , Moody and Fitch to deny Russian Industry and Economy of cheap money and in turn deny growth.


    Russia is acting like Europe its into austerity mode and that is not generating growth , US has higher debt but also has growth because they believe in growth model and not austerity.

    I think Russia can strike a balance between Growth and Debt ,Increasing Debt to 21 % wont do much harm but will significant boost economy and GDP if its put into the right project and later they can pay it back via their Oil & Gas money.
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    Post  sepheronx Wed Jul 17, 2013 1:56 am

    Austin wrote:Consider the simple fact Among the BRIC country the public debt of China is 50 % , India is 70 % ,Brazil is 55 % and Russia is 11 %

    If Russia increases its Public Debt by 10 % to around 21 % it will have $200 billion in money for Infrastructure and Public Utility Services that will help boost growth and boost GDP figures.

    Even at 21 % Public Debt , Russia debt will still be lower among BRICS.

    Russia has riches but those cannot be tapped immediately , It can pay back the money once these resources are tapped say in a decade or two from now.

    Money is no good if its not working for you and helping you ,  Low Debt is no good if its not generating growth.

    Russia cannot access Cheap money from European market due to low credit rating something deliberately done by Western clones like S&P , Moody and Fitch to deny Russian Industry and Economy of cheap money and in turn deny growth.


    Russia is acting like Europe its into austerity mode and that is not generating growth , US has higher debt but also has growth because they believe in growth model and not austerity.

    I think Russia can strike a balance between Growth and Debt ,Increasing Debt to 21 % wont do much harm but will significant boost economy and GDP if its put into the right project and later they can pay it back via their Oil & Gas money.
     
    What Russia should really worry about is domestic growth and development, and not just "profits".  In the end of everything, you end up having to rely on yourself and your nation for its development, and not some sort of outside context.  Yes, Moody's, S&P and all of that keep Russia's credit rating down in order to stunt growth, which I always wondered why Russia bothered to join WTO, when they were doing better when they were not part of it.  Investments didn't increase like they said it would.  Instead, they should drop WTO, and seek their own development regardless what others want.  Already russia has a big contract to deal with the Trans African railway, as well as nuclear power plants in various countries, not to mention China is one of the only countries investing heavily into Russia.  This is why I am not entirely fond of India, cause India barely invests in Russia other than military development, and I am aware that Russia does have investments in India like telecommunications, energy and pharma, but India decided to invest elsewhere (mianly USA and England).  China has pushed for multibillion dollar investments in Russia in auto manufacturing, Lithium technology R&D, Casino's, agriculture, defense, energy, production of raw materials, etc.  Russia should use its wealth gained to invest in the post soviet countries even more, as when they are more developed they will inturn invest more back, which Kazakhstan and Belarus does.  Only country that barely invests back is Ukraine, but that is because they are broke beyond believe.

    If Russia really wants to improve its economy, it has to stop waiting for foreigners to invest in them. The ones that do invest in them, they should consentrate on them as well, since China invests the most of almost everyone in Russia, Russia needs to meet Chinese demands and invest back into them as well as provide some incentive for China to keep investing, like lower tax rates and low interest rates on loans. As well, start working on developing countries that really need development, like Ethiopia, Kenya, etc. Those countries are stable, and hold a huge potential for future investments that could really pay off, especially things like energy, resource extraction, auotmobile sales and tourism. Russia should then also push for construction industries to try overseas in these countries, and especially in India, where construction is really important to its development.


    Last edited by sepheronx on Wed Jul 17, 2013 2:01 am; edited 1 time in total
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    Austin


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    Post  Austin Wed Jul 17, 2013 2:00 am

    The private sector in India is not much keen to invest in India say compared to US or Europe and one key reason is availability of cheap credit in these countries. Credit in India and Russia is expensive.

    Government to Governement model of business does not pay well .

    The Russian company Systema as part of Shyam Systema is out of India due to 2G scam.

    Well i just read they bought some spectrum in India

    http://www.thehindubusinessline.com/industry-and-economy/info-tech/sistema-shyam-needs-fresh-blood-and-fresh-thinking/article4788368.ece

    Any advice to your successor Dmitry Shukov?

    If you need to succeed in India you need to connect to the society. Otherwise it’s difficult to do business without understanding people’s aspirations. What I observe is that it is mentally very difficult for people who get salaries of Rs 80 lakh to serve a driver or a carpenter. I was brought up in a socialist set-up in Russia so it was easier. Good thing about Dmitry is that he has worked in many countries so I think he will do a great job here.

    http://articles.economictimes.indiatimes.com/2013-06-23/news/40147099_1_sistema-shyam-teleservices-ltd-8-circles-campaigns


    Last edited by Austin on Wed Jul 17, 2013 2:06 am; edited 1 time in total
    sepheronx
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    Post  sepheronx Wed Jul 17, 2013 2:03 am

    Austin wrote:The private sector in India is not much keen to invest in India say compared to US or Europe and one key reason is availability of cheap credit in these countries. Credit in India and Russia is expensive.

    Government to Governement model of business does not pay well .

    The Russian company Systema as part of Shyam Systema is out of India due to 2G scam.

    Corruption is one of the main issues of government investments, that is true. Credit in Russia isn't that expensive since other countries less profitable than India seem to still go for. As well, China is having large returns from investin in Russia, and why other countries seem to be reluctant is how politics are gearing towards closer relations with China, due to other countries (mainly west) try to undermine Russia, while China is not. India could really do its due diligance and try to tap into the Russian market, but chances of that happening are slim as their greed may look for "easy money".
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    Post  Austin Wed Jul 17, 2013 2:18 am

    sepheronx , the growth model is the best model as it can generate growth at moderate increase in debt.

    GDP only increases if you build railways , bridges , houses and similar infra project.

    Remember Russia is what it is today because it grew an average 5-6 % in 2000.

    Staganation in growth at cost of low debt is a dead end.
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    Post  sepheronx Wed Jul 17, 2013 3:01 am

    Austin wrote:sepheronx , the growth model is the best model as it can generate growth at moderate increase in debt.

    GDP only increases if you build railways , bridges , houses and similar infra project.

    Remember Russia is what it is today because it grew an average 5-6 % in 2000.

    Staganation in growth at  cost of low debt is a dead end.
     
    Reason why it grew was it had a talent that worked for cheap, as well as cheaper resources.  Not because of low or high debt.  Its growth now is mainly from construction, agriculture and its industrial output.  Japan has growth issues yet it has a massive debt, as well as an expensive work force.

    There is really no growth model, it is a term coined to explain a growth in various countries, in using their cheap labour as a means of almost slavery and trying to push out goods to others. Reality is, China has the market taken. Russia is a whole other ball game like countries like Germany. Germany makes their wealth through investments of others, investmetns in themselves, and heavy industrial output. Russia isn't China, they will not end up almost enslaving their own people to make ipods and what not. Instead, they will use their talented workforce to work on heavy industrial equipment (already happening) and invest in the areas of logistics and R&D. There really isn't that much money to be made from cheap goods, because like I mentioned, the market is already plauged by such means.

    Developing infrastructure for the sake of developing infrastructure is really a game of playing cat and mouse with the world bank and your countries GDP growth. Look at China and her ghost cities are a prime example. They give the allusion that there is high development that is in demand, and high investments from all around, when there really isn't any. It is just like the same game they played regarding their art sales and art galleries. Russia cannot play that game simply becasue they already have half of the world out to get them (to prevent them from growing), so even if they pushed for massive projects that lead to nowhere, it wont help their GDP growth.

    The main thing is the well being of their own people. If they can lower inflation, increase domestic demand of domestic products, and lower cost of living while increasing the standards, then Russia overall will be a much better country than a country with a high GDP growth rate. Growth can come in various sectors, but really, Russia is already the energy power, and they now just need to push their development onto other countries by helping developing them, while co investing in each other.
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    Post  medo Wed Jul 17, 2013 1:09 pm

    There is a difference between state and business. State are citizens and state must protect self sufficiency in strategically important segments and to enable state and its citizens to survive in time of crisis or war. State is not that much in profit as it is in protecting its natural environment and resources, protecting water and food supply as well as other strategically important elements. constant grow is impossible, because everything on our planet is limited, only human stupidity is unlimited. The main goal of state is to prepare and enable the state and citizens to survive bad times and for that you need to be self sufficient and with as small debt as it is possible and to have as much reserves as possible to cover needs in bad times.

    Look at the EU in what big **** it is, because they only look short sighted on profit today, but not in long term of consequences of such stupid decisions.
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    Post  Austin Sat Jul 20, 2013 2:55 am

    Bad news Economy grew just 1.7 % in first 6 months

    http://www.itar-tass.com/en/c36/814029.html

    So far, he noted, the ministry of economic development is speaking about continuing stagnation in the GDP growth. “But in terms of year-on-year growth, the situation has improved,” he said.

    According to Klepach, the GDP growth in June was 1.5 percent on June 2012, and “net of the seasonal and calendar factor, it means zero percent.”

    He cited statistics of the Russia State Statistics Service that GDP growth in the first quarter of 2013 was 1.6 percent. “According to our estimates, the figure in the second quarter is somewhere around 1.9 percent. Thanks to the low base effect, the GDP dynamics begin to improve,” he said.

    At the same time, he noted that the ministry of economic development might adjust GDP growth forecasts for 2013 in late August.

    The current forecast puts the index of GDP growth at 2.4 percent.

    The deputy minister however did not say there these forecasts would be raised or diminished.

    The ministry of economic development, in his words, proceeds from expectations that in the second half of the year 2013, in the thirds quarter in particular, the economy would grow faster that in the first six months of the year. “Let us wait till late August,” he said when asked when the forecasts would be updated.
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    Post  sepheronx Sat Jul 20, 2013 3:22 am

    Out of curiosity, did you even read the article?

    He cited statistics of the Russia State Statistics Service that GDP growth in the first quarter of 2013 was 1.6 percent. “According to our estimates, the figure in the second quarter is somewhere around 1.9 percent. Thanks to the low base effect, the GDP dynamics begin to improve,” he said.

    At the same time, he noted that the ministry of economic development might adjust GDP growth forecasts for 2013 in late August.

    The current forecast puts the index of GDP growth at 2.4 percent.

    The deputy minister however did not say there these forecasts would be raised or diminished.

    The ministry of economic development, in his words, proceeds from expectations that in the second half of the year 2013, in the thirds quarter in particular, the economy would grow faster that in the first six months of the year. “Let us wait till late August,” he said when asked when the forecasts would be updated.
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    Post  Austin Sat Jul 20, 2013 4:58 am

    Ofcourse there is the might and if there so we need to wait and see how it evolves.
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    Post  sepheronx Sat Jul 20, 2013 5:04 am

    Austin wrote:Ofcourse there is the might and if there so we need to wait and see how it evolves.

    Take into account that the first quarter for this year was about the same, or a tad bit higher than last year.  They saw about a 3.4% GDP growth (last year).  Also, take into account that they are seeing possibly 5-6% inflation, which is better than last year at about 7% inflation and 14% in 2008.

    I find that when they aim at fighting inflation, GDP growth falls.

    Businesses on average seem to be doing better, at least the heavy industrial facilities and the shipping industries/logistics.

    As well, a lot of money has been spent in the recent years regarding the build of technoparks and newer industries.  would be interesting to see how things do when they are fully built.

    GDP growth in Russia seemed to have happened when Russian government just decided to "sit" on the profits that was accumulated through taxation and oil, and rarely invested back.

    Taxation is a major issue at the moment in Russia.  They have a flat tax rate, but are proposing a flexible tax rate instead, which will change depending on wealth accumulation per year, which imo, may stunt investments as a flat tax rate is great for investors.  But one thing Russia needs to do for sure, is if they are to keep the flat tax rate, they will need to definitely change up its medical and educational system in order to meet demands, especially in increase of wages for professors and professionals, as a 14% tax rate may not entirely meet the demands for social education and Hospitals.  They really need to look into joint development of private and public, and link the profits from private and leak them into public, which they do not have a system for it (even though private schools exist).

    Even if the growth is only 2.4 - 3% this year, that is a hell of a lot better than -9% in 2008 and its high inflation.  So much money was spent in the last year than before, so we will see how it may play out in the years to come.
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    Post  Austin Sun Jul 21, 2013 4:39 am

    Regarding GDP development we need to see how the final figure pans out all depends on how economy grows in 3rd and 4th quarter so lets wait and see.

    The best way to grow your GDP is to invest in infra project the more they invest in viable project the better is for them , Improve Agriculture Growth , Improve Effeciency of people working i.e make them more productive and improve Business Image to attract more FDI.

    Russia May Trim State’s 18 Million Jobs to Boost Productivity

    Russia’s government, which employs about 18 million people, should cut its workforce to spur productivity, Finance Minister Anton Siluanov said.

    “When it comes to increasing labor productivity, you need to free up workers,” Siluanov told reporters in St. Petersburg today. “We’re afraid to cut jobs for workers in both the public sector and in the private sector.”

    Russia, growing at the weakest pace since a 2009 contraction, can no longer count on recovery from that crisis and expanding exports to increase output, Elvira Nabiullina, who takes over as central bank chairman next week, said at the St. Petersburg International Economic Forum yesterday. Boosting the economy, which is currently growing slightly below its potential of 3 percent to 4 percent, will require improving productivity, cutting costs and boosting investment, she said.

    The economy is currently operating “at nearly full capacity,” Siluanov said today. “When unemployment is low, it’s entirely possible to conduct structural reforms to reduce the number of workers, and thereby increase labor productivity,” he said.
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    Post  Austin Sun Jul 21, 2013 4:42 am

    Labor productivity

    This week Ekspert magazine published about a survey conducted by the Audit and Consultancy Group Finexpertiza (CPA Associates International in English) which calculated the labor productivity in several countries. The calculation is simple. How many people does a country need to produce 1 million dollars of its GDP? It turns out that Russia’s labor productivity is 5 times lower than those of the developed countries, but 3 times higher than that of China and 6 times higher than that of India. To produce 1 million dollar of its GDP Russia needs 57 people. Brazil needs 62 persons, China 152 and India 340. In Germany it takes only 13 people to produce 1 million dollars of its GDP, In the US this number is 11.


    So Russia has a long way to go to be productive , even bringing it to German Standards would mean improving productivity 4 times Shocked 
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    Post  TR1 Sun Jul 21, 2013 4:57 am

    Makes sense, lots of Russia's industry sectors use outdated business models and equipment.
    In many cases owners push against any innovators because they don't want to invest money in modernizing their holdings.

    That calculation is really a massive simplification though. You can see it taken to the extreme in India's case.
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    Post  Austin Sun Jul 21, 2013 5:15 am

    TR1 wrote:That calculation is really a massive simplification though. You can see it taken to the extreme in India's case.

    Not really we have a huge population base and we have low productivity pretty much a known fact , now we have some numbers to it.

    But the real problem for India is Corruption , I know for the fact because I stay here and know corruption is deep in our society experience it all the time.

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    Post  TR1 Sun Jul 21, 2013 7:00 am

    But how much of the population is involved in actually lucrative labor that produces high-er end goods?

    If we look at productivity within a sector, not the pop as a whole, I think India would look much better. Behind say Germany? Sure. But lets take shipbuilding for example. Is India really 30 times lower in productivity here?
    I find that hard to believe.

    Using this method of calculation, even if India manages to modernize even to a modest degree much of its industry to competitive standards, it will rank terrible on population-productivity.
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    Post  Sujoy Sun Jul 21, 2013 7:24 am

    TR1 wrote:But how much of the population is involved in actually lucrative labor that produces high-er end goods?

    India is more into producing higher end services in IT , Finance , Telecom rather than manufactured goods . Something which even the UK does. Pharmaceuticals is another area where India has made considerable in roads in foreign markets including Russia .

    The incentives to industry to produce manufactured goods does not exist in India . Though Indian automobile majors have been very successful both in India and overseas.

    The other important thing is the bulk of the population is involved in Agriculture . Agriculture apart from not being taxed also receives generous subsidies from state governments . So people are un willing to take up manufacturing unless the returns are as profitable.

    TR1 wrote:I think India would look much better. Behind say Germany? Sure. But lets take shipbuilding for example. Is India really 30 times lower in productivity here?
    I find that hard to believe.


    Productivity in India is low only among the manual labor class . Among the white collar workers who work in Finance, Real Estate , IT , Pharma , BPO it is among the highest in the world .

    The problem is India's high current account deficit  primarily because of a huge trade gap ( imports are more than exports). What that translates into is India is using its capital assets less efficiently than before . However , India is still growing @ 5% p.a which is higher than the global average of 3% and far far higher than the negative growth rate in the EU and US .
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    Post  sepheronx Sun Jul 21, 2013 7:53 am

    Austin wrote:Labor productivity

    This week Ekspert magazine published about a survey conducted by the Audit and Consultancy Group Finexpertiza (CPA Associates International in English) which calculated the labor productivity in several countries. The calculation is simple. How many people does a country need to produce 1 million dollars of its GDP? It turns out that Russia’s labor productivity is 5 times lower than those of the developed countries, but 3 times higher than that of China and 6 times higher than that of India. To produce 1 million dollar of its GDP Russia needs 57 people. Brazil needs 62 persons, China 152 and India 340. In Germany it takes only 13 people to produce 1 million dollars of its GDP, In the US this number is 11.


    So Russia has a long way to go to be productive , even bringing it to German Standards would mean improving productivity 4 times Shocked 

    Far too many facilities from the Soviet era that use old milling equipment. And the costs to modernize said equipment is too high as majority of those are imported. There are milling companies in Russia, with new products being investigated, but it is going to take a while until those come out, and majority of milling equipment out now are basic automated CNC equipment, not heavy duty ones that Germany produces. As well, since interest rates are pretty high even for businesses, many of them are not interested in getting a loan for it.

    But, the benefit of all of this is, there are more people working. As mentioned before, facilities that have created automated manufacturing, has ended up only with a few workers, as majority of it is already done by machines. UOMZ is producing a robotics sector where they will produce 700,000 parts, but only 40 - 80 people will have a job there. That is automation at work. I remember reading about a massive plant in Moscow making ceramics, and before hand, they needed 700 people at the facility to do the work, they now have something like a couple of dozen?

    More people working, means more tax money for government. But means companies pay more for workers. If worker wages go up, we can guarantee more of them moving to robotics as they will not be able to afford all their workers.
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    Post  sepheronx Sun Jul 21, 2013 7:57 am

    Austin wrote:Regarding GDP development we need to see how the final figure pans out all depends on how economy grows in 3rd and 4th quarter so lets wait and see.

    The best way to grow your GDP is to invest in infra project the more they invest in viable project the better is for them , Improve Agriculture Growth , Improve Effeciency of people working i.e make them more productive and improve Business Image to attract more FDI.

    Russia May Trim State’s 18 Million Jobs to Boost Productivity

    Russia’s government, which employs about 18 million people, should cut its workforce to spur productivity, Finance Minister Anton Siluanov said.

    “When it comes to increasing labor productivity, you need to free up workers,” Siluanov told reporters in St. Petersburg today. “We’re afraid to cut jobs for workers in both the public sector and in the private sector.”

    Russia, growing at the weakest pace since a 2009 contraction, can no longer count on recovery from that crisis and expanding exports to increase output, Elvira Nabiullina, who takes over as central bank chairman next week, said at the St. Petersburg International Economic Forum yesterday. Boosting the economy, which is currently growing slightly below its potential of 3 percent to 4 percent, will require improving productivity, cutting costs and boosting investment, she said.

    The economy is currently operating “at nearly full capacity,” Siluanov said today. “When unemployment is low, it’s entirely possible to conduct structural reforms to reduce the number of workers, and thereby increase labor productivity,” he said.

    Too many state employees. Actually, too many state jobs. There needs to be a more big push for private, but most private industries go automated. As well, Agriculture seems to be one of the biggest investments going on right now, with even private facilities making small "communities" for the workers to work at the corporate farms. To improve efficiency is next to impossible for every district. Best bet is, improve efficiency in areas like the major cities to towns, that have the proper facilities. Like India, Russia has many communities that are far outside of the town/city limits, and hard to improve their life style as well as efficiency of their farming.

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