Russian Economy General News: #2

sepheronx wrote:Was reading how Russia may not have any growth this year and they accounted lack of foreign loans.... how the fuck do you account foreign loans as a measure of gdp growth? That isnt even your money! It makes as much sense as adding prostition and drug money to GDP listing!

Fuck, Russian economists really suck hard. They better get purged and bring in monetarists from China amd Taiwan instead to help. Cause it seems Russians are bad at being economists.

Hell, they had another surplus. That should be accounted.

sepheronx wrote:Was reading how Russia may not have any growth this year and they accounted lack of foreign loans.... how the fuck do you account foreign loans as a measure of gdp growth? That isnt even your money! It makes as much sense as adding prostition and drug money to GDP listing!

Fuck, Russian economists really suck hard. They better get purged and bring in monetarists from China amd Taiwan instead to help. Cause it seems Russians are bad at being economists.

Hell, they had another surplus. That should be accounted.

Russia's newly approved budget rests on optimistic GDP forecasts as well as high oil prices, forcing the government to work hard to meet its projected growth rates, Finance Minister Anton Siluanov said.

The 2015-17 budget, Russia's tightest since the global financial crisis and its first since the Ukraine crisis erupted, was approved last week. It forecasts gross domestic product growth of 1.2 percent next year, and 2.3 percent and 3 percent in the following years.

"There are risks to economic growth rates. It is a rather optimist forecast; there are risks to oil price," Siluanov told the Reuters Russia Investment Summit.
"Without a doubt, this and the next year we will have to try very hard to ensure the planned growth rates."

Russia's economy has slowed sharply this year, partly due to large flows of capital out of the country and the trade and financial sanctions imposed by the United States and European Union in response to Moscow's role in Ukraine.

Delivery of the budget presents the greatest challenge for 51-year-old Siluanov since he replaced Alexei Kudrin, a veteran fiscal hawk popular with investors, three years ago.

It also tasks the government of President Vladimir Putin with leading the country prudently through the crisis, ignoring calls for more state spending to stimulate an economy that may grow by 0.5 percent at most this year.

"We are preparing and working on different scenario options, including a worst-case scenario," Siluanov said.

Tightening the Belt

The West imposed sanctions in retaliation for Russia's annexation of Crimea in March following the fall of a pro-Moscow Ukrainian president and later tightened them to target the financial, oil and defense sectors. Russia has taken counter-measures, including a ban on many U.S. and EU food imports.

The 1.2 percent growth forecast for next year is based on the assumption that the sanctions will slowly start to ease. Kudrin said this week that Russia would flirt with recession next year.

Risks to the budget also come from uncertainty over crude prices as oil and gas provide about half the government's revenues. Many economists see benchmark Brent crude, which usually trades at a slight premium to Urals — Russia's chief blend — at $90 per barrel by the end of next year.

"Today, crude trades already at $92-$93," Siluanov said. "And we balanced our budget at a price of $100 per barrel."

Urals traded at around $93.80 per barrel on Friday.

The government may also find it hard to raise debt, which is needed to ensure the deficit keeps to a planned 0.5 percent of GDP. The Finance Ministry wants to borrow $7 billion abroad next year and 1.1 trillion rubles ($28.8 billion) at home.
The domestic sum is twice this year's planned amount, which the ministry is already struggling to fulfill. "1.1 trillion rubles is a very big amount," Siluanov said, but would not comment on Russia's ability to borrow abroad, saying only that his ministry would "monitor the situation."

The key to ensure implementation of the budget, he said, was to control spending and under no circumstances overdo stimulus.

"We have to start living in a new paradigm, move toward a new understanding of the economic situation," he said. "We need to shrink, we need to build an economic model based on a new macroeconomic situation."

The Economic Development Ministry has called on the Central Bank to lower borrowing costs and on the Finance Ministry to boost spending, but Siluanov said both the government and the ministry supported the Central Bank's tight monetary policy.

"We need a hard-line approach toward budget and monetary policies," he said. "As soon as the Central Bank lowers rates in this situation, or budget spending increases, this will negatively affect the balance of payments."

This, he added, could lead to a further weakening of the ruble and send inflation up. Consumer price inflation has already overshot all forecasts, and is expected to climb well above 7 percent this year. "And that means again high rates, and off we go again," Siluanov said.

There are risks that revenues will fall short. "We would not want to raise taxes," Siluanov said. "This is an extreme measure, which we do not envisage implementing."

Instead, he said, his ministry might do what many economists fear: tap into one of its oil windfall revenue funds, the Reserve Fund. Set up with the goal of covering budget shortfalls, this fund stood at nearly $92 billion on Sept. 1.

The 2015-17 budget allows for use of up to 500 billion rubles from the Fund next year. On Wednesday the World Bank urged prudence in spending cash from the Reserve Fund and its sister, the National Wealth Fund.

"In the early stages, we would definitely use the Reserve Fund [rather than raise taxes]," Siluanov said.

He added that Russia needed a current account surplus of about 4 percent of GDP to make up for capital outflows, which are likely to exceed $100 billion this year. The current account surplus is projected at around 3 percent of GDP in 2014.

"In times of sanctions, it is necessary to have a strong balance of payments and a strong budget so as not to allow external factors, such as oil price, sales volumes of crude and crude products, to hinder our obligations," he said.

Sanctions and counter-sanctions threaten the broad global economy, he said. This could mean the goal, set by the Group of 20 leading nations, to boost growth by 2 percent above what's planned for the next five years, will not be achieved.

"It will not happen if we keep on introducing mutual restrictions or sanctions," he said. "Restricting trade has a negative effect on investment, both in Russia and in other countries. Therefore, it is certainly a bad tool for solving problems. Political issues must be resolved through negotiations."

Austin wrote:I think the present worry is how to take care of falling rouble , the basket is close to CB intervention which means more USD from forex will be spent in supporting Rouble or CB will raise interest rates to support rouble or both in some measures

Austin wrote:Facing Sanctions and Crashing Oil Prices, Russia's New Budget Looks for Silver Linings

http://www.themoscowtimes.com/business/article/facing-sanctions-and-crashing-oil-prices-russia-s-new-budget-looks-for-silver-linings/507957.html

Russia's newly approved budget rests on optimistic GDP forecasts as well as high oil prices, forcing the government to work hard to meet its projected growth rates, Finance Minister Anton Siluanov said.

The 2015-17 budget, Russia's tightest since the global financial crisis and its first since the Ukraine crisis erupted, was approved last week. It forecasts gross domestic product growth of 1.2 percent next year, and 2.3 percent and 3 percent in the following years.

"There are risks to economic growth rates. It is a rather optimist forecast; there are risks to oil price," Siluanov told the Reuters Russia Investment Summit.
"Without a doubt, this and the next year we will have to try very hard to ensure the planned growth rates."

Russia's economy has slowed sharply this year, partly due to large flows of capital out of the country and the trade and financial sanctions imposed by the United States and European Union in response to Moscow's role in Ukraine.

Delivery of the budget presents the greatest challenge for 51-year-old Siluanov since he replaced Alexei Kudrin, a veteran fiscal hawk popular with investors, three years ago.

It also tasks the government of President Vladimir Putin with leading the country prudently through the crisis, ignoring calls for more state spending to stimulate an economy that may grow by 0.5 percent at most this year.

"We are preparing and working on different scenario options, including a worst-case scenario," Siluanov said.

Tightening the Belt

The West imposed sanctions in retaliation for Russia's annexation of Crimea in March following the fall of a pro-Moscow Ukrainian president and later tightened them to target the financial, oil and defense sectors. Russia has taken counter-measures, including a ban on many U.S. and EU food imports.

The 1.2 percent growth forecast for next year is based on the assumption that the sanctions will slowly start to ease. Kudrin said this week that Russia would flirt with recession next year.

Risks to the budget also come from uncertainty over crude prices as oil and gas provide about half the government's revenues. Many economists see benchmark Brent crude, which usually trades at a slight premium to Urals — Russia's chief blend — at $90 per barrel by the end of next year.

"Today, crude trades already at $92-$93," Siluanov said. "And we balanced our budget at a price of $100 per barrel."

Urals traded at around $93.80 per barrel on Friday.

The government may also find it hard to raise debt, which is needed to ensure the deficit keeps to a planned 0.5 percent of GDP. The Finance Ministry wants to borrow $7 billion abroad next year and 1.1 trillion rubles ($28.8 billion) at home.
The domestic sum is twice this year's planned amount, which the ministry is already struggling to fulfill. "1.1 trillion rubles is a very big amount," Siluanov said, but would not comment on Russia's ability to borrow abroad, saying only that his ministry would "monitor the situation."

The key to ensure implementation of the budget, he said, was to control spending and under no circumstances overdo stimulus.

"We have to start living in a new paradigm, move toward a new understanding of the economic situation," he said. "We need to shrink, we need to build an economic model based on a new macroeconomic situation."

The Economic Development Ministry has called on the Central Bank to lower borrowing costs and on the Finance Ministry to boost spending, but Siluanov said both the government and the ministry supported the Central Bank's tight monetary policy.

"We need a hard-line approach toward budget and monetary policies," he said. "As soon as the Central Bank lowers rates in this situation, or budget spending increases, this will negatively affect the balance of payments."

This, he added, could lead to a further weakening of the ruble and send inflation up. Consumer price inflation has already overshot all forecasts, and is expected to climb well above 7 percent this year. "And that means again high rates, and off we go again," Siluanov said.

There are risks that revenues will fall short. "We would not want to raise taxes," Siluanov said. "This is an extreme measure, which we do not envisage implementing."

Instead, he said, his ministry might do what many economists fear: tap into one of its oil windfall revenue funds, the Reserve Fund. Set up with the goal of covering budget shortfalls, this fund stood at nearly $92 billion on Sept. 1.

The 2015-17 budget allows for use of up to 500 billion rubles from the Fund next year. On Wednesday the World Bank urged prudence in spending cash from the Reserve Fund and its sister, the National Wealth Fund.

"In the early stages, we would definitely use the Reserve Fund [rather than raise taxes]," Siluanov said.

He added that Russia needed a current account surplus of about 4 percent of GDP to make up for capital outflows, which are likely to exceed $100 billion this year. The current account surplus is projected at around 3 percent of GDP in 2014.

"In times of sanctions, it is necessary to have a strong balance of payments and a strong budget so as not to allow external factors, such as oil price, sales volumes of crude and crude products, to hinder our obligations," he said.

Sanctions and counter-sanctions threaten the broad global economy, he said. This could mean the goal, set by the Group of 20 leading nations, to boost growth by 2 percent above what's planned for the next five years, will not be achieved.

"It will not happen if we keep on introducing mutual restrictions or sanctions," he said. "Restricting trade has a negative effect on investment, both in Russia and in other countries. Therefore, it is certainly a bad tool for solving problems. Political issues must be resolved through negotiations."

Austin wrote:I think the present worry is how to take care of falling rouble , the basket is close to CB intervention which means more USD from forex will be spent in supporting Rouble or CB will raise interest rates to support rouble or both in some measures

sepheronx wrote:

Austin wrote:I think the present worry is how to take care of falling rouble , the basket is close to CB intervention which means more USD from forex will be spent in supporting Rouble or CB will raise interest rates to support rouble or both in some measures

Only purging CB will help. They are fucking the Ruble as you may have noticed. Who cares if it is a certain amount to USD. They barely trade to US and are getting rid of their USD. Only thing left are the idiots at CB who are causing damage by worrying about Ruble value to USD. Well, them and yourself.

Viktor wrote:

sepheronx wrote:Was reading how Russia may not have any growth this year and they accounted lack of foreign loans.... how the fuck do you account foreign loans as a measure of gdp growth? That isnt even your money! It makes as much sense as adding prostition and drug money to GDP listing!

Fuck, Russian economists really suck hard. They better get purged and bring in monetarists from China amd Taiwan instead to help. Cause it seems Russians are bad at being economists.

Hell, they had another surplus. That should be accounted.

The Purge is coming

I can tell that you read this article but still - an excellent inteview

magnumcromagnon wrote:

sepheronx wrote:

Austin wrote:I think the present worry is how to take care of falling rouble , the basket is close to CB intervention which means more USD from forex will be spent in supporting Rouble or CB will raise interest rates to support rouble or both in some measures

Only purging CB will help. They are fucking the Ruble as you may have noticed. Who cares if it is a certain amount to USD. They barely trade to US and are getting rid of their USD. Only thing left are the idiots at CB who are causing damage by worrying about Ruble value to USD. Well, them and yourself.

Nationalizing the central bank and restoring capital and exchange controls is what they need to do!

Austin wrote:

magnumcromagnon wrote:

sepheronx wrote:

Austin wrote:I think the present worry is how to take care of falling rouble , the basket is close to CB intervention which means more USD from forex will be spent in supporting Rouble or CB will raise interest rates to support rouble or both in some measures

Only purging CB will help. They are fucking the Ruble as you may have noticed. Who cares if it is a certain amount to USD. They barely trade to US and are getting rid of their USD. Only thing left are the idiots at CB who are causing damage by worrying about Ruble value to USD. Well, them and yourself.

Nationalizing the central bank and restoring capital and exchange controls is what they need to do!

If they can restore capital control that would be good thing to do , Not a good time to make Rouble full convertable by Jan 2015 which is what CB is targetting.

If they can stabalise the rouble then thats half the economy problem they would solve.

I just hope Rouble does not go in a free down ride as India experience with its Rupee Fall a year back.

China’s Suifenhe to increase investment in Russian economy to $200 mln in 2014
The Russian side is also investing in Suifenhe’s economy

SUIFENHE (China), September 28. /ITAR-TASS/. Investments by the southeastern Chinese city of Suifenhe in the Russian economy will rise by 8% in 2014 to $200 million, the Suifenhe deputy mayor said on Sunday.

“This year, we can state the successful development of some investment projects. Among them, we can highlight $3 million investment in the construction of a flour mill in Ussuriisk [the Russian Far East], and also projects in the timber industry, agriculture and coal production,” the Suifenhe deputy mayor said.

“Therefore, the volume of our investment in Russia will rise by 8% to $200 million,” he said.

The Russian side is also investing in Suifenhe’s economy, head of the department for attracting investment to the Suifenhe economic cooperation border area Wei Lintao said.

“At present, the construction of a Russian-Chinese furniture factory is under way. Investment totals 600 million yuans [$97.93 million]. The factory is expected to be launched in October this year,” the Suifenhe investment official said.
Another Russian company plans to accommodate a logistics base on an area of 25,000 sq m in Suifenhe to promptly deliver Chinese goods to Russia, the Chinese official said.

“This investment will total 115 million yuans [$18.77 million] and the launch of the company is scheduled for 2015,” he said.
Also, the Suifenhe authorities are currently examining a request filed by a Russian-Chinese company for acquiring production premises, Wei Lintao said.

Meanwhile, the deputy head of the Suifenhe automobile checkpoint on the border with Russia said on Sunday that the checkpoint’s capacity would be increased tenfold by 2015 to 5.5 million tons of cargoes and 6 million people annually to boost bilateral trade.

The reconstruction of the Suifenhe border crossing started in 2011. The checkpoint’s modernization envisages expanding its automobile lanes from the current four to 24 to reduce the time of the passage of trucks and passenger buses across the border, the automobile checkpoint official said.

“We hope that the checkpoint’s reconstruction will turn Suifenhe into the main point of the transit of Chinese goods to Russia and the number of Russian tourists to China will increase significantly,” the Suifenhe checkpoint deputy head said.

http://en.itar-tass.com/economy/751733

sepheronx wrote:Economists in Russia have differing opinions but it comes down to one single problem - lack of long term, low interest rate loans.  Which I agree, in this case, Russia needs to get rid of CB or take it over to be able to force it.  Now, is there a way they can circumvent CB policies?  Like for instance, allowing banks to decide individually to give long term low interest rate loans?  Like VTB bank or Gazprombank?

They should give ultimatum to Sberbank about getting those foreign reserves back into Russia.  That is $500B that could be used for improving domestic manufacturing.

Werewolf wrote:

sepheronx wrote:Economists in Russia have differing opinions but it comes down to one single problem - lack of long term, low interest rate loans.  Which I agree, in this case, Russia needs to get rid of CB or take it over to be able to force it.  Now, is there a way they can circumvent CB policies?  Like for instance, allowing banks to decide individually to give long term low interest rate loans?  Like VTB bank or Gazprombank?

They should give ultimatum to Sberbank about getting those foreign reserves back into Russia.  That is $500B that could be used for improving domestic manufacturing.

A few T-90 tanks infront of CB, monitoring of all employees and chefs, arresting the head of CB, if they refuse then execution as enemy of the state, because that is exactly what a private bank is.

There is always one thing in life that is always the same, be it in this universe or some parallel universe, power is right, you learn it on the school yard, you learn it in military life, in civil job and you see it daily on global stage when mighty countries bully smaller one. Might is right, those apes in the CB treat others like this is the jungle so lets show them who is the king in the jungle. Doesn't matter how rich someone is, true patriots don't take money for selling out own country and death effects everyone. They bow down to the government or will face some T-90s.