Economy of the Russian Federation

[jouni]

Re: Russia's Economy Has Shrunk So Much It's Now Almost The Same Size

GDP is just a number, Kremlin palaces are there, so is the huge defense budget. If needed Russian people are ready to sit in the cold and eat cabbage soup for years. If the electricity is cut, they can read books of old Soviet glory in candle light.

In Russia people are still subjects, whose duty is to serve the state. Western thinking that state is for the good of the citizen, does not exist in Russia.

 

[Sylex21]

Re: Russia's Economy Has Shrunk So Much It's Now Almost The Same Size

Russia's economy will bounce back, it might take a year or two or five or ten but it will be back. Crimea will be now Russia's forever, their show of power is defying the west and showing how powerless they are to force Russia to give in to their demands will last at least a generation. In the end, this will be a big win for Russia and that is nearly inevitable.

 

[Gabriel92]

Re: Russia's Economy Has Shrunk So Much It's Now Almost The Same Size

If needed Russian people are ready to sit in the cold and eat cabbage soup for years. If the electricity is cut, they can read books of old Soviet glory in candle light..

They are prepared.
An average Russian can stay 20 days without eating if he has Vodka.

 

[santosh10]

Re: Russia's Economy Has Shrunk So Much It's Now Almost The Same Size

@Gabriel92 @jouni @Sylex21

i dont think "exchange rate"/Nominal GDP has any major role in health of an economy......

Russian Budget is Budgeted in Ruble value, similarly how Indian Budget is budgeted in Indian rupees. and as Russia's inflation hardly raised to 9.5% from its low of 6.5% of early 2014 level to date, the fall in Ruble value looks mainly intended to help its oil exporters to maintain profit margin in Ruble value in international market......

and the way Russia has over $400bil+ foreign reserve, the fall of Ruble looks intentional to help its oil exporters and other domestic industries, mainly food industries against the imported products.....

and thats the major benefit of being outside Eurozone, countries like Russia, Japan, Brazil etc may depreciate their currencies whenever they want, but not others..... :ranger:

also, Russia's inflation has been in match with India's during the last 10-12 years, hence making production cost very expansive this way as compare to its importing rivals like OECD, China etc. so this fall in Ruble value would only help it adjust its losses on the production side for home industries :thumb:

Vladimir Putin's math is looking fuzzy. Russia's budget is based on oil trading for $100 a barrel, government documents reveal.
Finance minister Anton Siluanov calls that an "alternative economic reality."
Oil currently trades around $60 a barrel.
Siluanov warned that cuts will be needed since the budget doesn't reflect the hits Russia's economy has taken from the standoff in Ukraine and falling oil prices.
When Russian parliament passed the draft budget for 2015-2017 last week, it assumes that oil trades at $104 a barrel for 2014 and $100 for 2015-2017. That might have made sense when oil traded at $115 in June, but not now.
The result: Russia has a huge hole in its books.
And it might get worse. Goldman Sachs (GS) and top bond investor Jeffrey Gundlach predict oil could fall as low as $60 in the coming months.

Oil Price Math on Ruble Depreciation

and in a more clear and simple way, "Russia's Budget is based on Oil Price at (32.5*$100) = '3,250' Ruble a barrel by early 2014, OR, on (59*60*0.95) = '3,360' Ruble a Barrel by early 2015, a simple math at Oil Price at $60 per barrel and 1.0US$=59 Ruble, by end 2014.
(it used a factor of 0.95 considering the expected rise of 'additional' inflation by 5% due to fall in Ruble value during last 3-4 months.......)

//x-rates.com/graph/?from=USD&to=RUB&amount=1.00

as we see as below, Russia's inflation rising to hardly upto 10% by December 2014, from its 6.5% level in early 2014. hardly around 5% "additional" inflation they getting due to the currency depreciation :coffee:

tradingeconomics.com/russia/inflation-cpi

always keep in mind, Russian Budget is Budgeted in Ruble value, not in US$. similarly Indian Budget Expenditure is budgeted in Indian Rupees value.

;
i would like to discuss it further. today we have news that India's Whole Sale price inflation approaching zero, then its because of very low oil/energy price right now. while i just been to Russia and Petrol prices were around 32 Ruble a liter, i remember, and its the same at present, no fall in petrol/diesel/gas prices there because Ruble also depreciated with the same pace as fall in oil prices.

and yes, Indian rupees was valued at around 1.0 Ruble to INR 1.9, while now Ruble going at par with Indian Rupees, check this curve for the last 1 year, Ruble w.r.t. Indian Rupees :ranger:

//x-rates.com/graph/?from=RUB&to=INR&amount=1.00

and here we find Russian inflation even rising to over 9.0 percent while it was around 6.5 percent few months before, while India's wholesale inflation reaching to zero, from around 6 percent few months before :coffee:

ibtimes.co.in/india-records-wholesale-price-inflation-zero-lowest-5-years-617205

and thats why have used a factor of 0.95 considering 'additional' inflation due to sharp fall of Ruble value.
and AA, Russian Budget is budgeted in Ruble value, not in US$ value, isn't it? i mean, regardless what, they would get the profit on oil sale in Ruble value, with adjusting 5 percent of inflation itself :thumb:

 

[jouni]

Re: Russia's Economy has shrunk to size almost same as Spain

When Russia goes back to ruble economy, nobody is gonna invest in Russia. It is in danger of becoming isolated and stagnated country.

 

[Hari Sud]

Re: Russia's Economy has shrunk to size almost same as Spain

This shrinking is a numbers game, not a reality. The GDP in Russian currency is divided by number of required to buy the US dollar. Since more are required today, hence the Russian GDP is forced to look smaller and smaller. That is known weakness in the GDP calculations.

It is better to start looking for a better method.

Even India's GDP has shrunk by 2% because Rupee to Dollar has declined from about 60.5 to 63.1 cents.

Not really, it is the method and expressing it in dollars is defective.

 

[santosh10]

Re: Russia's Economy has shrunk to size almost same as Spain

When Russia goes back to ruble economy, nobody is gonna invest in Russia. It is in danger of becoming isolated and stagnated country.

Russia is a war economy, and they will never have as much problems on the economic side as now.....

and even on the trade side, this is how Russia is positioned, as compared to US/UK/India as below. Russia has the strongest economic future than any other country.... the 3rd best, as compare to the top 3 worse. it doesn't look like sanctions on russia would affect on them, as compare to those countries who imposing sanctions :ranger:

//en.wikipedia.org/wiki/List_of_sovereign_states_by_current_account_balance#WTO_Data

.

 

[prohumanity]

Re: Russia's Economy has shrunk to size almost same as Spain

I think it is a very bad idea to push Russia further in corner by the western bullies as even a cat fight back fiercely if she thinks there is no way to survive. What if Russia is put in this cats situation...just helping terrorists with high tech weapons will do the job...exactly like what West did by supplying stinger missiles etc to Islamic terrorists in Afghanistan to push Soviet Union back. Has anyone thought about that huge risk ? Too many enemies are already there...its wise not to make more enemies. Try to solve problems with Russia and don't keep wounding the bear...if the bear survives..western baloon will burst.

 

[DingDong]

Re: Russia's Economy has shrunk to size almost same as Spain

After the fall of the USSR Russia's government committed Harakiri when it adopted a look-west policy and ignored it's cold-war era allies. What goes around comes around.

Not in so distant past Germany had the audacity to threaten us with "economic consequences" over the Italian Marine issue. Let us thank our policy makers for taking intelligent decisions which helped us in negating the bad-effects of the western economic sanctions post Pokharan-2. We grew at above 9%.

 

[LETHALFORCE]

Re: Russia's Economy has shrunk to size almost same as Spain

Russia cannot compete in the global theatre, the country is a total disaster .
They cannot utilize their natural resources they have destroyed their own currency
And isolated themselves for next few decades. The question now is what will brics
Be without the r? Russia economy be compared to Spain is nice they should be
Compared with Greece. Putin has thrown Russia in the gutter.

 

[DingDong]

Re: Russia's Economy has shrunk to size almost same as Spain

Russia cannot compete in the global theatre, the country is a total disaster .
They cannot utilize their natural resources they have destroyed their own currency
And isolated themselves for next few decades. The question now is what will brics
Be without the r? Russia economy be compared to Spain is nice they should be
Compared with Greece. Putin has thrown Russia in the gutter.

Let us look at the brighter side of this energy war. Oil prices are at all-time low which translates into huge savings for us. We can push Russia to do more to keep us in good humour and ask the US to be a bit more generous. BRIC is an artificial block, it never existed in reality. There is zero synergy.

 

[Gabriel92]

Russian economy suffers first contraction since global crisis

Next year -3%.

(Reuters) - Russia's economy shrank sharply in November and the rouble resumed its slide on Monday as Western sanctions and a slump in oil prices combined to inflict the first contraction in GDP since the global financial crisis.

The Economy Ministry said gross domestic product shrank 0.5 percent last month, the first drop since October 2009. With oil exports forming the backbone of the economy, analysts said the contraction is likely to worsen.

The slide on the oil market accelerated this month after the exporters' group OPEC refused to cut output, and prices are down almost 50 percent from a peak in June. On top of this, the sanctions imposed over Moscow's role in the Ukraine crisis have deterred foreign investment and led to over $100 billion flooding out of the Russian economy this year.

"With the current oil price we expect things to get worse. There is no cause for optimism," said Dmitry Polevoy, chief economist for Russia and CIS at ING Bank in Moscow. "This is linked to sanctions first of all, oil and the panic we saw on the market in December. The damage to the banking system and consumer sentiment will take a long time to repair."

The sanctions have severely reduced the ability of Russian companies to borrow abroad, triggering the worst currency crisis since Russia defaulted on its debt in 1998.

The rouble, which had strengthened on Friday, slumped over 6 percent against the dollar in early trade on Monday in thin trade, although it later regained some of the losses.

Overall the ruble's weakness will inevitably lead to higher inflation next year by pushing up the cost of imports, threatening President Vladimir Putin's reputation for ensuring Russia's prosperity.

Government ministries forecast the slump in oil prices will lead to a 4 percent contraction of the economy next year and that inflation could exceed 10 percent.

FALLING ROUBLE

The rouble had lost more than half of its value at one stage in December, although it has recovered since then after the government introduced informal capital controls and raised interest rates steeply.

The government issued orders to large state-controlled oil and gas exporters Gazprom (GAZP.MM) and Rosneft (ROSN.MM) to sell some of their dollar revenues to shore up the rouble.

Russians have kept a wary eye on the exchange rate since the collapse of the Soviet Union. Hyper-inflation wiped out their savings over several years in the early 1990s and the rouble collapsed again in 1998.

At 9.00 a.m., the rouble had lost over 3 percent against the dollar and was trading at 56.00 RUBUTSTN=MCX, hurt by exporters scaling back foreign-currency sales after meeting their end-of-month tax payments.

The Russian currency is much weaker than the 30-35 seen in the first half of the year but well up from an all-time low of around 80 per dollar in mid-December.

The ruble's slide has prompted huge buying of foreign currency in Russia and heavy withdrawals of bank deposits, heaping pressure on a vulnerable banking sector whose access to Western capital markets is restricted by the sanctions.

On Friday, Russian authorities also significantly scaled up rescue funds for Trust Bank, saying they would provide up to $2.4 billion in loans to bail out the mid-sized lender, the first bank to fall victim to the crisis.

(Writing by Dmitry Zhdannikov; editing by David Stamp)

Russian economy suffers first contraction since global crisis | Reuters

 

[asianobserve]

Re: Russian economy suffers first contraction since global crisis

The economic malaise of Russia is expected given the twin problems of plunging oil prices and Western sanctions. The consensus is that their problem is set to get worse this year.

 

[power_monger]

News on Russian economy

Please post news articles related to russian economy in this thread.

Strippers bid to save Russian economy by taking wage cut inspired by Vladimir Putin

 

[power_monger]

Re: News on Russian economy

Russian economy is ready to grow

 

[jouni]

Lehti: Venäjä haluaa lykätä jättimäisen kaasuputken rakentamista - Kiina ei innostu ajatuksesta - Uutiset - Talouselämä

Russia wants to change the gas deal with China, falling prices makes it non profitable.

 

[jouni]

Re: News on Russian economy

Opel poistuu Venäjältä – "Vasta alkusoitto" | Taloussanomat

GM leaves Russia, takes loss of 600M rather than stay.

 

[Aravind Sanjeev]

This sanctions are not going to work any sooner or later. The sanctions might downgrade Russia's economy for now but once it is adapted, West is just ending creating a great enemy. Good job.

 

[jouni]

No matter how bad things go in Russia, they can take comfort in the fact that they got Crimea.

 

[prohumanity]

Don't underestimate Russian People...they are tough as nail and brave as lions...Russia is going to emerge stronger from this crisis. They have always conquered past crises.