Economy of the Russian Federation

jouni

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ollowing the ruble's sharp devaluation, Russia's nominal GDP dropped from 1.8 trillion dollars in 2014 to approximately 1.1 trillion dollars this year. Accordingly, Russia's GDP for purchasing power parity (PPP) also dropped by almost half.

As a result, Russia will probably lose its ranking as one of the 10 largest economies in the world in 2015.

That means the world's largest and most resource-rich country will fall behind the smaller and resource-poor countries of Italy, France and Britain — not to mention Japan and Germany.

Government coffers continue to fill thanks to the ruble's devaluation, but the real value of that money is falling and incomes have ceased to grow, even in nominal terms.

http://www.themoscowtimes.com/opini...ects-gobble-up-russias-budget-pie/539795.html
 

pmaitra

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ollowing the ruble's sharp devaluation, Russia's nominal GDP dropped from 1.8 trillion dollars in 2014 to approximately 1.1 trillion dollars this year. Accordingly, Russia's GDP for purchasing power parity (PPP) also dropped by almost half.

As a result, Russia will probably lose its ranking as one of the 10 largest economies in the world in 2015.

That means the world's largest and most resource-rich country will fall behind the smaller and resource-poor countries of Italy, France and Britain — not to mention Japan and Germany.

Government coffers continue to fill thanks to the ruble's devaluation, but the real value of that money is falling and incomes have ceased to grow, even in nominal terms.

http://www.themoscowtimes.com/opini...ects-gobble-up-russias-budget-pie/539795.html
Adding some information that Moscow Finland Times forgot to mention:

Balance of Trade
Russia: 8705.00 monthly (trade surplus)
Finland: -160.00 monthly (trade deficit)

Unlike Moscow Finland Times, my data comes with a reference: http://www.tradingeconomics.com/country-list/balance-of-trade

Debt to GDP
Russia: 17.92
Finland: 59.30

Unlike Moscow Finland Times, my data comes with a reference: http://www.tradingeconomics.com/country-list/government-debt-to-gdp

Thank you for your concerns.
 

jouni

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Russia is declining to poverty with smile on it's face...

How will the situation develop? Over the long term, we will most likely witness the erosion of Russia's social pyramid. Those below middle class — who constitute the social and electoral base of the current regime — will decline into poverty. They will not rebel, however — the ruling class will hand out some goodies during the next election campaign in exchange for their votes.

The middle class will move a notch down: people will stop traveling abroad, work just to feed themselves, cut corners to pay for housing and utilities, and hold onto their old cars. How can they protest against the regime that once allowed them to prosper? That would show lack of respect. Besides, they'd rather think about how to make a living than run around the streets waving some placards that no one understands. They'd better vote for the hand that feeds them or there might be nothing to eat at all.

http://www.themoscowtimes.com/opinion/opinion/article/russias-war-fridge-vs-tv/540319.html
 
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Gabriel92

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Russia is declining to property with smile on it's face...

How will the situation develop? Over the long term, we will most likely witness the erosion of Russia's social pyramid. Those below middle class — who constitute the social and electoral base of the current regime — will decline into poverty. They will not rebel, however — the ruling class will hand out some goodies during the next election campaign in exchange for their votes.

The middle class will move a notch down: people will stop traveling abroad, work just to feed themselves, cut corners to pay for housing and utilities, and hold onto their old cars. How can they protest against the regime that once allowed them to prosper? That would show lack of respect. Besides, they'd rather think about how to make a living than run around the streets waving some placards that no one understands. They'd better vote for the hand that feeds them or there might be nothing to eat at all.

http://www.themoscowtimes.com/opinion/opinion/article/russias-war-fridge-vs-tv/540319.html
Russia,with its big reserves of ressources (so the billions of $) had the capacity to diversify their economy,but no,they thought the oil prices would always be over 100$. Now they are facing the consequences of their own stupidity. (+ the sanctions........)
 

Yun Ming

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Russia,with its big reserves of ressources (so the billions of $) had the capacity to diversify their economy,but no,they thought the oil prices would always be over 100$. Now they are facing the consequences of their own stupidity. (+ the sanctions........)
Russia is diversifying it's economy. Even State-owned Gazprom's monopoly will end.

From Forbes:
Russian national champions have sat and watched with envy the U.S. oil and gas revolution and now want “fracking” technologies for themselves. The unconventional opportunities are staggering. The Bazhenov shale in Western Siberia could contain as much as 100 billion barrels of recoverable tight oil, which is five times larger than the Bakken shale in North Dakota that sparked America’s oil renaissance. In fact, the Bazhenov is believed larger than the next 15 biggest shale opportunities in the world combined. The EIA estimates “a risked shale gas in-place of 1,920 Tcf, with 285 Tcf as the risked, technically recoverable shale gas resource.” As such, Russia actually still remains a sleeping energy giant (remember when Russia oil production was “about to peak?”). Shale oil and gas in Russia is a ways off, and not necessarily needed at this point, but it surely won’t be hindered by the environmental policies that block Europe and are likely to drag the USA. Putin’s goal of 450,000 b/d tight oil by 2020 seems unlikely for now since the state-of-art technologies required remain out of reach. Western sanctions, augmented by the collapse in crude prices, have reduced capital spending and delayed key energy projects in Russia. The largest state-connected banks no longer have access to Western financing (see Russia’s energy financing problems here). Less myopically, the ability to separate business from politics often goes underrated: IOCs realize Russia’s massive resource base, and Russia knows it will need more money and expertise. The liberalization of the LNG export business in 2013 that ends Gazprom’s monopoly is itself a sign that Russia’s energy sector is becoming more globalized.

From 2014-2035, the IEA estimates that the global energy supply system requires over $40 trillion in new investments, with oil ($13.7 trillion) and gas ($8.8 trillion) constituting over half of that. Russia alone needs close to $2 trillion for oil and gas. For petroleum, the world’s primary fuel, Chevron concludes that over 200 billion barrels of base business projects and new field production will be needed by 2030 alone. And now, low crude prices are putting $1 trillion in investments in future projects at risk. Ultimately, the energy might of Russia can only grow: over 80% of the world’s population resides in undeveloped nations, and hydrocarbons will remain the key energy sources for decades to come. They’re cheaper, more reliable, and fully entrenched in a global energy system that devours 38 million tonnes of oil equivalent every day, where Russia is the 2nd most important supplier.

The Importance of Russia’s Oil and Gas Isn’t Going Away



Read more: http://www.forbes.com/sites/judeclemente/2015/03/25/how-much-energy-does-russia-have-anyways/
 

Yun Ming

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Russia,with its big reserves of ressources (so the billions of $) had the capacity to diversify their economy,but no,they thought the oil prices would always be over 100$. Now they are facing the consequences of their own stupidity. (+ the sanctions........)
Russia knew the risks of being an Oil/gas dependent economy.

Here's an article 5 years ago (2010):
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCfUrLO_ySjc

If you're too lazy to read, here is parts of that article:

1. They predicted lower than $70 Oil prices!!!!!

Oil prices may average less than $70 in the course of the next 10 years, undercutting revenue and reducing the energy industry’s share of GDP, Kudrin said at a conference in Moscow today. Budget revenue from the mineral extraction tax and export tariffs on oil and gas may drop as much 4 percent during this decade, Kudrin said.

2. They Knew diversification is Key!

"Russia lurched into its deepest recession on record in 2009 after the credit crisis undermined demand for crude oil, the country’s main export, and other raw materials. Last year’s 83 percent rebound in the price of Urals crude propelled Russia toward recovery, challenging the resolve of policy makers to wean the economy off its commodity reliance. Even so, President Dmitry Medvedev has called Russia’s dependence on raw materials “humiliating.”

Medvedev and his predecessor, Prime Minister Vladimir Putin, have said they aim to use the worst financial slump in a decade to diversify output, overhaul infrastructure and pare back the state’s role in the economy by selling stakes in companies."



And it seems to be working:

Oil&gas revenues comprise just 27% revenue of it .

http://www.awarablogs.com/putin-midterm-interim-results/

Russia needs to diversify more but it's on the right path. :D
 

amoy

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Dutch disease
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture). The putative mechanism is that as revenues increase in the growing sector (or inflows of foreign aid), the given nation's currency becomes stronger (appreciates) compared to currencies of other nations (manifest in an exchange rate). This results in the nation's other exports becoming more expensive for other countries to buy, and imports becoming cheaper, making those sectors lesscompetitive.
Russian real exchange rate appreciation and NON-OIL exports



From May 1st, the export duty on oil in Russia to decrease by 11% to $116.5 per ton


From May 1, 2015, the export duty on oil in Russia will decrease by 11% to $116.5 per ton as compared to $130.8 per ton in April.

According to a leading expert of the Department of Tax and Customs Tariff Policy of the Ministry of Finance Alexander Sakovich, the average oil price for the monitoring period from March 15 to April 14, 2015, inclusive, made up $53.475 per barrel or $390.4 per ton. For comparison, in the previous month, the average price was $58.14975 per barrel or $424.5 per ton.
 
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pmaitra

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Goldman Sachs advises to buy Russian ruble in 2016
Goldman Sachs recommends buying Russian and Mexican currencies over South Africa’s rand and Chile’s peso.
Top Goldman Trades See Dollar Rising With Inflation Outlook
Among its six top ideas, Goldman’s strategists said investors should buy U.S. inflation-linked bonds over their conventional equivalents and recommended buying the Mexican peso and Russian ruble against South Africa’s rand and Chile’s peso.
 

garg_bharat

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A country needs agriculture and industries to survive. The economic numbers are good for self-aggrandizement, nothing more.

Russia has mineral wealth par excellence. It continues to have positive trade balance with rest of world despite sanctions.

As long as Russia continues to strengthen its domestic industrial infrastructure, it is safe. Isolation for Russia means very different things compared to isolation for some other smaller country.
 

nirranj

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Russia should to increase farm outputs to flood the global market with cheap food. For a country of their size its a real shame to import dairy, meat and farm produce. First step towards complete self reliance is to be self reliant in terms of food, energy and weapons. Rest are all luxury.

Think if Russia produces all food items (except for geography specific exotic items) for itself. Their caucausus can produce varieties of Mediterranean crops, Abkhazia can produce hazlenuts (Russia can come up with a nutella competitor), they should help the CIS nations by dveloping a dairy industry and importing meat and cheese from there rather than from europe, start exporting veal (reindeer meat) to new markets and marketing it as an exotic item, developing a big poultry and piggery industry that will flood the world markets with cheap meat (they can use their massively surplus and cheap grain to feed the livestock). They have almost 7.6 million sqkm of exclusive economic zone across three oceans. But their fishing industry is meagre 5billion dollar industry! They should start investing in fisheries that is already suffering lack of funding, ageing vessels and decreasing fish population due to indiscriminate exploitation. If developed properly, Russian fisheries have a huge East and South East asian market to exploit.

They should use this opportunity to make themselves an global food giant. The increasing global population (mostly in poor third world) requires more food (at cheap rate) and oil. Russia has the later. If they can also become an across the spectrum food exporter, for sure ruble can one day compete with the dollar.
 

pmaitra

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Nabiullina named Euromoney Central Bank Governor of the Year 2015
Elvira Nabiullina, governor of the Central Bank of Russia, has been named Euromoney’s Central Bank Governor of the Year for 2015.





Faced with crippling sanctions and the oil-price correction, economists credit the governor, and the central-bank team, for dramatic moves last year to stabilize the currency through interest-rate hikes, and efforts to boost local-currency and hard-currency liquidity for financial institutions.
These measures, combined with the decision to implement a free-floating exchange rate and inflation-targeting regime, are stabilizing the financial system and boosting foreign-investor confidence.
The central bank’s prudent monetary policy stance – challenged by stubborn domestic inflation, capital outflows and tight dollar liquidity – is helping to move the real exchange-rate towards levels consistent with medium-term fundamentals.
Nabiullina says: "This award is a great honour for me, as well as, definitely, the high evaluation of the Central Bank of Russia’s overall team performance.
Euromoney, the leading global banking and finance publication, has nominated a Central Bank Governor of the Year for more than 30 years, coinciding with the World Bank/IMF meetings. The previous three winners of the award were Raghuram Rajan of India last year, Agustín Carstens of Mexico in 2013, and Mark Carney (then governor of the Canadian Central Bank) in 2012.
 

pmaitra

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Western Sanctions Blowback: Russia Takes Another Economic Victory Lap
Russia’s federal budget revenues are now diversified. Thanks for the help, Washington

RI Staff | Tue, Apr 18, 2017 | [SOURCE]


Come and see

We honestly think it’s time for Moscow to thank Washington for its “sanctions regime.”

Prime Minister Dmitry Medvedev met with Putin yesterday to discuss an economic report that will be presented to the State Duma on Wednesday — and despite the West’s valiant efforts, the economic outlook for Russia looks extremely promising.

It’s official: Western sanctions have allowed Russia to diversify and strengthen its economy. Thanks, guys:

A positive feature of our revenue last year is that non-primary, or non-oil revenue accounted for nearly two-thirds, or more precisely 64 percent of total revenue. This means that the structure of our economy is changing. Of course, this is linked to fluctuating oil prices. They have been growing slightly this year, and the economic structure is changing a little, but the overall direction is clear: non-primary revenues are growing, and primary revenues are decreasing. We need to maintain this course.

We know that John McCain likes to yap about how Russia is a “giant gas station.” It wasn’t true then, and it’s certainly not true now. The oil-and-gas sector accounts for roughly 16% of Russia’s GDP, and before Washington implemented its ingenious sanctions, 52% of federal budget revenues.

That percentage has nearly halved.

Yes, thanks to a much-needed nudge by the West, things have ... changed.

Some other developments:

  1. “One important result, in particular, was that industrial production growth was up by 1.3 percent. This shows that our industry is picking up again, though this is the average growth.”
  2. The pharmaceutical industry, for example, has grown by nearly 24 percent. This is very important because our pharmaceutical industry assists in developing the production of modern medicines, including those classed as vital and most important. Around 70 percent of vital medicines are produced in Russia now. They are cheaper, as they are not purchased with foreign currency, and this industrial growth creates a general positive environment for development.”
  3. We see a similarly positive picture in agriculture, which posted growth of 5 percent last year. I think this is the consolidated result of the efforts the authorities have made over these past 15 years. The agricultural sector has undergone radical transformation over this time. It now feeds the entire country and has tremendous export potential. Modern investment is driving its growth. Most importantly, we see here how growth in one sector benefits development in other sectors. Spurred by growth in agriculture, farm machinery manufacturing is also developing. Production of farm machinery, combine harvesters and tractors was up by 60 percent.”
  4. Unemployment remains within manageable limits. It stood at 5.5 percent last year. This year, we expect it to be around 5 percent of the economically active population.” (Compare to Europe’s 10% or higher unemployment.)
  5. “Inflation, as we know, has also come down. It was 5 percent year on year, and this is an unprecedentedly low rate in Russia’s recent history.”
Thanks again, Washington.
_______________

Commentary: I wanted to post this long time back and had it bookmarked. Better now than never. Economic sanctions make sense only if the target country has some trade deals with the source country. When sanctions are placed, it not only hurts the target country, it also hurts the source country, because the deal is deferred or cancelled. The deal existed only because both parties sought benefit from it in the first place.
 

pmaitra

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Russian foreign reserves reach highest level in 28 months



The ruble fell after oil prices collapsed in the second half of 2014. Also that year, the United States, European Union, and their allies imposed sanctions against Russia over the conflict in eastern Ukraine.

The central bank spent over $67 billion in a failed attempt to curb a ruble collapse. The Russian currency fell from 35 to 80 against the US dollar on December 16, 2014.

In 2015, the government decided to stop propping up the ruble to save the reserves. The central bank free-floated the national currency and focused on replenishing reserves.
Russia’s reserves consist of foreign currency, special drawing rights (SDR) holdings, reserve position in the IMF and physical gold.

At present, the central bank has slowed the process of replenishing the reserves, as it hopes to cut inflation to four percent from the current 4.3 percent.
 

prohumanity

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Russia will emerge fine from these vicious financial attacks from West. Russians are hardy people...best example is how they defeated Hitler...
The worst for Russian economy is behind...those forces could not destroy a nation like Russia with all their coordinated economic sanctions.
 

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