Russian Economy General News: #12

lancelot wrote:If this was a couple years back I would say the government would put a lot of the extra capital in a sovereign wealth fund. But given recent changes in Russia I doubt this will happen. The State will just use this capital to accelerate the transition to self-sufficiency. The West has shown itself to be unreliable on the extreme and Russia needs to be prepared. I still think the sovereign wealth fund is a good idea though. Using all the extra capital on the spot risks overheating the economy and eventually hyperinflation.

The sovereign wealth fund showed its usefulness since it provided a needed cushion after the last oil price drop.

Inflation is a monetarist boogieman in Russia. The reality is that there is a financing deficit due to high interest rates and precisely the
anemic government spending. Russia is the last country on the planet that needs to worry about fake GDP growth through cheap credit.
It is reducing its GDP growth through ridiculously tight monetary and banking policy.

Infrastructure development in regions which are not saturated with it such as Moscow and even St. Petersburg will have no inflationary
effect. Spending more on military equipment will not drive Russian inflation either.

ALAMO wrote:

par far wrote:Oil prices have hit $90 per barrel of oil, what effects will this have on Russia?

You can guess, as they have a budget tailored for an average $44

you can to be many things, however best would be to provide this excedent to reserve contingencies and strategic projects that ensure immunity in the face of western sanctions

lancelot wrote:If this was a couple years back I would say the government would put a lot of the extra capital in a sovereign wealth fund. But given recent changes in Russia I doubt this will happen. The State will just use this capital to accelerate the transition to self-sufficiency. The West has shown itself to be unreliable on the extreme and Russia needs to be prepared. I still think the sovereign wealth fund is a good idea though. Using all the extra capital on the spot risks overheating the economy and eventually hyperinflation.

The sovereign wealth fund showed its usefulness since it provided a needed cushion after the last oil price drop.

As per in the past, I would expect a balanced approach to reserves, infrastructure, economic growth and social development.

This is the time that they should start investing cycle, as there's more than enough reserves and they've been running crisis budgets for almost a decade. I've seen propositions to increase oil price cut off to $50 and that is a good step. Also, infrastructure and spending in science and R&D should be increased. God knows that Ru economy is underperforming considering all the natural wealth and good educational structure of population. Some of it is due to geopolitics, but Putin's admin has to take the blame, as well. I hope they give Mishustin free hand and let him work. Just keep politics outside of economy.

caveat emptor wrote:This is the time that they should  start investing cycle, as there's more than enough reserves and they've been running crisis budgets for almost a decade. I've seen propositions to increase oil price cut off to $50 and that is a good step. Also, infrastructure and spending in science and R&D should be increased. God knows that Ru economy is underperforming considering all the natural wealth and good educational structure of population. Some of it is due to geopolitics, but Putin's admin has to take the blame, as well. I hope they give Mishustin free hand and let him work. Just keep politics outside of economy.

Some truth here.  The issue at hand is that Russian government doesn't want to "overheat" the economy.  What we are seeing in other nations they are overspending without having a clear cut goal or how to achieve such goal.  In the instance of the US, they are doing both - overspending without such goal, and borrowing such money to overspend.  So not only are things not developing or being done, it is overblowing the budgets of individual projects and inflation booming.

Russia is trying to be careful in its spending and this isn't a bad thing as its a byproduct left over from hard learned lessons of the Soviet Union. Do not forget, many of these politicians are left overs of the old guard and while many consider them old dinosaurs that need to go, I do not see it as such.  Such men and woman are aware of the mistakes made as they lived through them, and in doing what they are doing they feel that it is the much safest route.  As I see things, experience outweighs the academic learned in that with experience sees both sides of challenges and gains with a tangible example.  Something that new generation of people who like to call the older "boomers" do not understand.

I am not an old man by any means, that title is reserved for Franco (sorry friend).  But I have lived through enough and seen enough to know that I rather have a slow but steady growth with the odd drops here and there, than a boom then a bust.  What I am referring to is both China and the United States.  China's massive boom is now coming at a cost - human development and the migration flow of its people.  China is having a hard time keeping up and is doing nearly anything possible to sustain high growth rates, even with those growth rates now slowing down (by most measures, still a lot compared to most, but to China's recent past, it is low).  And in the end, there really isn't anything China can do.  Slow and steady can win the race as the old story goes in the Tortoise and the Hare.  China will continue to face rather slower growth which may still be higher than most, it will be rather low for its population.  If China did it slower, they may be behind right now than they actually are, but their growth would continue for far longer and be more sustainable, while being able to have better control of migration and development of areas outside of south east China.  China could be an entirely different entity and be paradise compared to now with its urban jungles and slow decay of its vegetation along with a culture and history so beautiful, but nearly gone.

I wouldn't say this is all the exact case of Russia in that its all about trying to be slow and careful.  There are of course obstacles such as what KVS pointed out with the nonsense the Central Bank of Russia is doing.  But we must not forget, Russia has only recently in the last 10 years started to regain itself after the collapse of the USSR.  For up to 20 years prior, it struggled to not only keep itself together, but to start to rebuild.  Now it is at the stable point in its journey, and it will be another 10 years that we go from this stable point to real growth and development far beyond what it was capable of doing.  So long as the old guard and the new guard keep the vision and the structure, it will thrive.

Mishustin is a brilliant man and I suspect he along with the old guard and new guard will guarantee the development.  Already along with Shoigu's smart idea of creating new planned cities, this will revitalize east of the Urals and drive development not seen since the Soviet times.  We have witnessed how their rather smart and strict budget rules have managed to get BAM developing which was something very hard even during USSR times.  It also helped create the Crimean bridge which is a feat that most nations cannot do.

TL;DR - Slow and steady development makes it much easier to maneuver and adjust to any challenges thrown at it, rather than having a boom and bust so bad it is a make or break situation.

@miketheterrible
I agree with most of your points, but Ru can afford a lot of things i am talking about and they are also needed. Both gov and companies are running tight ship and have a lot of cash in hand. Starting an governenment and soe investing cycle in lock step with private companies will give a big boost to the country. It will further push down unemployment and finally meaningfully push salaries, as personal income for majority of population underperformed in a last decade. They have to find a way to reinvest some of the windfall profits into economy opposed to being taken out of the country or stuffed in reserves.

Building huge cities in the middle of nowhere is a huge mistake. It is a repeat of the same mistakes which led to the Brazilian economic collapse after the Kubitschek government decided to build a whole new capital Brasilia in the middle of the forest far away from all the major population centers. It is retarded and not only capital intensive but energy intensive as well. With modern automation technologies you don't need a lot of people to explore the resources in either Siberia or the Arctic. And people can live some place where they actually have quality of life. If they decide to focus on living in large cities like Moscow or St. Petersburg I do not see that as a problem. Cities are more cost efficient in terms of providing services per person anyway.

Russia could use massive investment in subway networks and mass transit on the major cities outside Moscow. They should also increase the amount of natural gas powered buses they have so they can use the oil for export or whatever.

United Nation: Moscow best city in the world to live



On the flip side, more freeloaders from Asia and Africa will now flood Moscow.

Link

Russians began to buy household appliances en masse

In particular, the representative of AliExpress Russia pointed out that demand in some categories in the first weeks of January
increased four to five times compared to the same period in 2021. Washing machines, refrigerators, electric ovens, and
dishwashers are most in demand.

Other marketplaces and online stores also report sales growth of hundreds of percent. According to market participants, such
a rush is associated with the aggravation of the coronavirus pandemic.: Russians seek to improve their way of life if they have
to stay at home. Also, purchases were affected by the cancellation of many entertainment activities, including travel, and as
a result, the appearance of extra money.

Surge in consumer spending on so-called big ticket items in Russia.

The hand waving in the second paragraph is basically BS. People need jobs and money to buy such household goods. The
pandemic is associated with people not getting money instead of the other way around. The real explanation is pent up
demand. Russia is not in a lockdown frenzy and people sense that the plandemic is ending. Omicron is producing more cases
but vastly less deaths per case than Delta.

Krepost wrote:@KVS

I think you misunderstood the article.
What the article says is: Due to Covid, Russians are spending less on travel and other entertainments and are ending up with extra cash at the end of the month. So they are buying more appliances and other durable and relatively expensive items.

Same scenario happened in Canada during late 2020 and all of 2021. Canadians spent less on travel and restaurants. Instead, they spent the money on buying cars and doing home renovations.

You are missing the scale of the purchases. Russians are supposed to be poor according to the western fake stream media.
So they cannot have the money for $5,000 tourist trips abroad.

jhelb wrote:United Nation: Moscow best city in the world to live

https://us10.proxysite.com/process.php?d=Ikx6bB0CQw63ZlIaZY9xmGJiiL6e2slz%2BcLsjGqx2cGDcw%2FzzY9vc4NqIy5wEb%2B%2F9nYlyHTf4Fy5%2BcOcsNOyHP%2BDZK2AdyBNxTA32m%2Ba823JTIA%3D&b=1

On the flip side, more freeloaders from Asia and Africa will now flood Moscow.

There isn't free stuff in Moscow, it is the reason, it became one of the best cities in the world.

Greenpiss is a joke in Russia. Nobody with a brain takes their "campaigns" against incinerators and nuclear power plants seriously.
The emotional campaigns over forest clearing is not really a Greenpiss led agitation. There are liberasts always involved who see this
as a tool for political influence since Russians have an attachment to nature and forests. They are like Germans in this regard and not
like Anglos. But the liberasts have been declining since 2011 which was their demonstration peak.

The shift in the viewpoint of young Russians (born during the 1980s and later) over the last 15 years is spectacular. The Levada Center
poll was brought up on this board before. Europe and the west are no longer of interest to this age group. This change in perception
has occurred naturally without any anti-western propaganda. It has been the f*cking hate spew from the west that has deleted its
influence in Russia. Greenpiss and liberasts have lost because they are closely tied to the mythical west. Western deciders have not
clued in to this change.

kvs wrote:Greenpiss is a joke in Russia.   Nobody with a brain takes their "campaigns" against incinerators and nuclear power plants seriously.
The emotional campaigns over forest clearing is not really a Greenpiss led agitation.   There are liberasts always involved who see this
as a tool for political influence since Russians have an attachment to nature and forests.   They are like Germans in this regard and not
like Anglos.   But the liberasts have been declining since 2011 which was their demonstration peak.  

The shift in the viewpoint of young Russians (born during the 1980s and later) over the last 15 years is spectacular.   The Levada Center
poll was brought up on this board before.   Europe and the west are no longer of interest to this age group.   This change in perception
has occurred naturally without any anti-western propaganda.   It has been the f*cking hate spew from the west that has deleted its
influence in Russia.   Greenpiss and liberasts have lost because they are closely tied to the mythical west.   Western deciders have not
clued in to this change.  

 

Do you think these assholes can stop a major protect from happening in Russia?

"Russia reports largest income growth in nearly a decade"


"However, like in many former Soviet nations, Russian financial statistic numbers don’t take into account the country’s sizeable black and gray economies, making the true picture far harder to determine. Many businesses continue to pay workers, as well as buy goods and supplies, in cash without declaring it to the authorities. One Swedish-backed study estimated the off-the-books share of the Russian economy at a whopping 45% in 2018. This number would make Russia Europe’s largest real economy, in terms of purchasing parity."


I think the Swedish backed study is pure nonsense and bull shit but Russia does have a "off the books" economy, do you think that the Russian government should clamp on this?


https://www.rt.com/russia/548948-largest-income-growth-decade/






In the video we can see what a "off the books" economy" looks like.

par far wrote:


Do you think these assholes can stop a major protect from happening in Russia?

No chance. The cutting down of near-urban forests is more of an issue and it is not controlled from abroad.
Greenpiss has no presence to block any garbage incinerator and nuclear plant project.

In terms of remote deforestation, Putin has done more to stop illegal logging than Greenpiss and
the liberasts with all of their screeching. They were not honest about procurement chain for
those logs. They were blaming China when it was U-rope that was fully responsible. We see
U-rope screeching about Russia restricting log exports and applying e-tags to every log. Greenpiss
is a mercenary outfit that will be direct to attack some other target, but they simply have no other
targets with which they have any traction in Russia.

Russians do not have nuclear power derangement syndrome. They also do not care about Gazprom
and Rosneft extraction operations in the Arctic. Really, Russia is not fertile soil for weeds like Greenpiss.

Which means good news for Russia. Or not. The government is in urgent need of storage for all the money flowing in.

Hole wrote: Which means good news for Russia. Or not. The government is in urgent need of storage for all the money flowing in.

Thanks to sanctions Russia is self-sufficient. They build with materials, powered by energy that are both internally and eternally sourced!

Record high monthly export and trade balance ($26.72 billion) in December.

Russian incomes in terms of gasoline in different percentile ranges. The propaganda is that economic stratification has worsened under
Putin. This is a total lie. You can clearly see an increase in the middle income brackets over the last 20 years. That the top 10% have gotten
richer does not mean everyone else is poorer. The bottom 10% has seen a nearly ten fold increase compared to a three fold increase in the
top 10%.

Some can quibble about the utility of using gasoline as a metric. But it actually is a good one. Gasoline prices in Canada have outpaced
official inflation substantially over the last 20 years.

kvs wrote:
 The propaganda is that economic stratification has worsened under
Putin.  This is a total lie.  You can clearly see an increase in the middle income brackets over the last 20 years.   That the top 10% have gotten
richer does not mean everyone else is poor. 

Income has not been on desired path since 2013. And, if sanctions and oil price drop take part of the blame, neoliberal economic policies of Russian government are of concern for me. Hoarding cash need to be stopped and some money has to start flowing into economy. Raising oil budget price to $55 and limiting CBR foreign currency purchases are some of the answers.
Small business and consumer debt ballooned and these are short term, expensive loans. To overcome this salaries, especially, for the bottom 40-50% have to start going up. Russian economy, currently, needs over 2 million workers. Increase in salaries would help mitigate that shortage, as well.