Economy & random Russia posts.

[TsarSamuil]

Western firms invest billions in Russia as economy returns to growth.

RT.com
23 Nov, 2016 11:05

A number of large Western corporations are increasing investment in Russia, with the country’s economy recovering from its deep decline, according to Bloomberg.

Global retailers like Sweden's IKEA and France's Leroy Merlin have started pouring billions of dollars into factories and stores in Russia betting on the potential of the market following two years of recession.

Leroy Merlin will reportedly spend €2 billion to double the number of outlets in Russia, while American food corporation Mars has already expanded to produce chewing gum and pet food locally.

IKEA reportedly intends to invest $1.6 billion into new stores over the next five years. Earlier this year, the Swedish retailer opened a $60 million factory in the city of Nizhny Novgorod and acquired land for another mall near St. Petersburg.

“This is the moment for investment, I strongly believe in the potential of the Russian market long-term,” said the general director of IKEA Russia, as quoted by Bloomberg.

The inflow of foreign investment into the country slowed two years ago after a series of anti-Russia sanctions introduced by Western nations over the conflict in Ukraine.

Major corporations like General Motors had to curtail operations in Russia. The devaluation of the ruble reduced companies’ dollar and euro revenues, though sharply cut operating costs.

“The last two or three years have been a disaster. Now, the situation is changing as the ruble exchange rate has stabilized and the Russian economy is forecast to return to growth soon,” said Frank Schauff, head of the Association of European Businesses in Moscow.

Foreign direct investment rose to $8.3 billion in the first nine months this year against the $5.9 billion invested in all of 2015, according to data compiled by the Central Bank of Russia. However, the figure is still below the level seen before the Ukraine crisis.

[TsarSamuil]

All sectors of Russian economy to see growth in 2017 – economy minister.

RT.com
20 Jan, 2017 13:42

The Russian economy is expected to grow by up to two percent this year, Russian Economic Development Minister Maxim Oreshkin told RT.

“The economy has been recovering since last year. In 2017 we are expecting wide growth and investments in all areas,” he said on the sidelines of the World Economic Forum in Davos.

The ruble and ruble assets have been among the strongest over the last two years, and focus is currently shifting toward investment in the Russian economy, said the minister.

“We are working with all investment sources. Such an approach gives us the best possible opportunity to achieve results. We are hopeful that the growth rate will continue to rise,” he added.

Russia is pursuing an optimal strategy of diversifying work with Western and Eastern investors, according to Oreshkin.

“We have some structural constraints: these are demographic issues as well as export limitations. We are working on this right now and adopting special measures,” he said.

The minister stressed that the forum is crucial, as it gives an opportunity to hold meetings with foreign companies investing in Russia, as well as to carry on negotiations with colleagues from different countries.

[TsarSamuil]

Russia may not be in a rush to have sanctions lifted.

RT.com
31 Jan, 2017 11:17

Russian President Vladimir Putin may wait for a while before touching the question of sanctions with US President Donald Trump.

The penalties imposed in 2014 have been pulling Russia’s economy back, and have kept the ruble from strengthening. But a weaker ruble makes it easier for the Russian government to balance the budget.

Should the US ease restrictions the value of the ruble may go up by ten percent, according to a majority of experts surveyed by Bloomberg. Forty-one percent of experts expect the Russian currency to gain up to five percent.

Russia’s national budget income is mostly tied to oil and gas exports with all the contracts made in US dollars. This means the ruble, which has lost half of its value since 2014, may compensate a threefold reduction in oil prices with the budget income not falling as much as it could have if the rate was stronger.

A weaker ruble boosts domestic manufacturing and trade with a stronger national currency able to distort the competitiveness of local producers. To avoid that, the authorities announced plans to resume purchases of foreign exchange to weaken the ruble further.

“Russian officials won’t be too happy about the ruble’s rally and will certainly intervene. Look at their reaction to the current ruble levels. Of course, they won’t let it strengthen too much,” said Vadim Bit-Avragim, a money manager at Kapital Asset Management in Moscow, as quoted by Bloomberg.

On Tuesday, the Russian Finance Ministry recommended devaluing the ruble by ten percent.

The Russian ruble has been one of the world's best-performing currencies since touching a record low last January. The currency is up about two percent against the dollar so far this year following its best-ever year in 2016 when it managed to gain 20 percent. The ruble was trading 0.2 percent stronger at 60.0375 against the dollar as of 10:15am in Moscow.

There has been speculation that President Trump may ease the punitive measures against Moscow brought by the former US administration. The two heads of state did not discuss the issue in their first phone talk, according to Kremlin spokesman Dmitry Peskov.

[TsarSamuil]

Medvedev: It Is Good News For Russia, Sanctions Are There To Stay!

Russia Insider
Mar 8, 2017

[TsarSamuil]

Russia's banking system has SWIFT alternative ready.

RT.com
23 Mar, 2017 13:09

If the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is shut down in Russia, the country’s banking system will not crash, according to Central Bank Governor Elvira Nabiullina. Russia has a substitute.

"There were threats that we can be disconnected from SWIFT. We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative," Nabiullina said at a meeting with President Vladimir Putin on Wednesday.

She also added that 90 percent of ATMs in Russia are ready to accept the Mir payment system, a domestic version of Visa and MasterCard.

Izvestia daily reported that as of January 2016, 330 Russian banks had been connected to the SWIFT alternative, the system for transfer of financial messages (SPFS).

In 2014 and 2015, when the crisis in relations between Russia and the West were at their peak over Crimea and eastern Ukraine, some Western politicians urged disconnecting Russia from SWIFT.

In November 2015, Nabiullina said the SPFS was close to being completed.

The central bank’s website says the system was established “as an alternative channel for interbank cooperation with the aim of ensuring the guaranteed and uninterrupted provision of services for the transmission of electronic messages on financial transactions.”

At present, the system has some drawbacks. It doesn’t work from 9pm to 5am Moscow time and costs up to five cents per wire transfer, which is regarded expensive.

[TsarSamuil]

Russia: 'Our economy has entered a stage of growth,' Medvedev tells Putin.

Ruptly TV
Apr 17, 2017



Russian Prime Minister Dmitri Medvedev reported that Russia's economy has entered "a stage of growth," during a meeting with Russian President Vladimir Putin at his residence in Novo-Ogaryovo, Moscow Region, Monday.

"At the end of last year, and this is very important, the growth of industrial production amounted to 1.3 percent, which means that our industry is already rising," Medvedev said.

The leader went into details, reporting that the pharmaceutical industry had "grown by almost 24 percent," noting, "this is very important, because our pharmaceutical industry is developing the production of modern medicine." He went on to describe it as "essential" in creating "a positive background for development."

SOT, Vladimir Putin, Russian President, (Russian): "On April 19, you will make an address in the State Duma before deputies with the Government's report on the results of last year's work. What are you going to speak about? What are you going to report to the Parliament? And, of course, what do you intend to introduce to the whole country, the public?"

SOT, Dmitri Medvedev, Russian Prime Minister, (Russian): ""In general, the situation with the economy, indeed, over the past year has changed. Our economy has entered a stage of growth. We saw it late last year and earlier this year. In particular, at the end of last year, and this is very important, the growth of industrial production amounted to 1.3 percent, which means that our industry is already rising."

SOT, Dmitri Medvedev, Russian Prime Minister, (Russian): "But this is an average growth. I want to provide some of our respected colleagues-deputies information on some sectors, where the growth is very impressive. For example, our pharmaceutical industry has grown by almost 24 percent. This is very important, because our pharmaceutical industry is developing the production of modern medicines, which are related to the category of so-called vital and essential. We already produce 70 percent of essential medicines in Russia. And, therefore, they are just cheaper because they are not bought for the foreign currency. Such industrial growth, of course, creates a positive background for development."

SOT, Dmitri Medvedev, Russian Prime Minister, (Russian): "Inflation also reached, as you know, very low borders. Last year it was about 5 percent, comparing year to year, which is unprecedented in the modern history of the Russian Federation."

SOT, Dmitri Medvedev, Russian Prime Minister, (Russian): "I would also like to note that, despite the considerable difficulties that we have had in recent years in the economy, we maintain a moratorium on tax increases, by order of the president, which, in my opinion, is very important for business."

[TsarSamuil]

Russian foreign reserves reach highest level in 28 months.

RT.com
28 Apr, 2017 10:24

The Central Bank of Russia reports the country's foreign reserves have risen to $400 billion in the week through April 21, their highest level since the beginning of the economic crisis in late 2014.

The record high was seen in August 2008, when Russia's reserves stood at $598 billion. By January 2014, they were at $500 billion.

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.

"Our policy remains: we will make a decision on replenishment of gold and foreign currency reserves when there will be no risks to our target inflation, which is four percent, and to maintain the target in the medium term,” Governor Elvira Nabiullina said last month.

According to Nabiullina, while the regulator doesn’t reject the idea of replenishing the reserves, they are “by all international standards sufficient,” she said.

[TsarSamuil]

Putin Slams Russian Governors : Whom Are You Helping To Get Rich?

Russia Insider
Dec 30, 2017

[TsarSamuil]

Upward trend in Russian economy continues – Putin.

RT.com
10 Jan, 2018 14:26

The Russian economy has recovered and is growing, according to President Vladimir Putin. Last year, Russian GDP grew after the recession of 2015 and 2016.

“The positive dynamic in the Russian economy goes on. We have a lower than expected budget deficit; our gold and foreign exchange reserves are growing. The Russian economy is on the rise, and this trend continues,” Putin said on Wednesday.

The World Bank data says the Russian economy grew 1.7 percent last year. The same figures can be expected this year as well, the forecast says.

Economists like former finance minister Aleksey Kudrin have warned that the Russian economy could grow faster only if the Kremlin implements structural reforms.

Inflation in Russia remains at its lowest level since the collapse of the Soviet Union, falling to 2.5 percent last year. Rapid growth in consumer prices has long been considered one of the biggest woes of the Russian economy.

Given the low inflation, the central bank plans to gradually cut the key rate to 6-7 percent per annum from the current 7.75 percent.

The historical minimum of the key rate in Russia was in 2013 at 5.5 per year. The all-time high is 210 percent in 1993.

[TsarSamuil]

Russian banks ready to switch off SWIFT – official.

RT.com
13 Feb, 2018 13:28

Russian financial institutions and firms are ready to work without SWIFT's interbank cash transfer services, according to Deputy Prime Minister Arkady Dvorkovich.

“Certainly, it is unpleasant, as it will prove a stumbling block for companies and banks, and will slow down work. It will be inevitable to deploy some aged technologies for information transfer and calculations. However, the companies are technically and psychologically ready for the shutdown as this threat was repeatedly voiced,” Dvorkovich said, as quoted by TASS.

He added that the measure may have a negative impact on corporations working in the US and Europe.

“In general, disconnecting Russia from SWIFT would be a crazy step on the part of our Western partners. It is obvious that for the companies which work in Europe and the US it would be harmful. And this applies not only to the shutdown of the service,” he said.

The potential disconnection of Russia from SWIFT has been under discussion since 2014, when the EU and the US introduced the first round of international penalties against Moscow over alleged involvement in the Ukraine crisis and the reunification with Crimea.

At the time, the European Parliament called for strong actions against Russia, including expelling the country from money transfer services. However, the Society for Worldwide Interbank Financial Telecommunication regarded the recommendations as violating rights and damaging for businesses.

In 2017, Russia’s Central Bank Governor Elvira Nabiullina told President Vladimir Putin that the banking sector had been provided with all the necessary conditions for operating lenders and payment systems in case of disconnection from SWIFT. According to the regulator, 90 percent of ATMs in Russia were ready to accept the Mir payment system, a domestic version of Visa and MasterCard.

The Mir payment system was introduced in 2015 after clients of several Russian banks (SMP Bank, InvestCapitalBank, Russia Bank and Sobinbank) were unable to use Visa and MasterCard due to the sanctions.

[TsarSamuil]

Communists propose confiscation of property to boost Russian economy.

RT.com
14 Feb, 2018 10:14

A group of Communist Party lawmakers is pushing for a nationalization drive in a bid to boost the Russian economy and strengthen national security.

In a draft document sent to the State Duma and published on the Russian parliament’s website on Wednesday, the group describes nationalization as a forced but compensated confiscation of private property. It says that turning assets over to the federal state would help meet public needs, increase the general effectiveness and social orientation of the national economy, and strengthen Russia’s national security and sovereignty.

The list of assets that would be subject to nationalization include land plots, mineral deposits, forests, natural bodies of water, and enterprises in strategically important branches of the economy, such as energy, transport and heavy industry.

Other grounds for forced nationalization include the threat of mass personnel layoffs in companies that control major parts of the economy in a city or a region, the bankruptcy of a strategically important enterprise, a monopoly position of a company, violations committed during privatization, and the potential threat of strategically important enterprises falling under foreign control.

The bill reads that nationalization would be applied to any form of private property, including shares in various companies.

At the same time, sponsors of the motion acknowledge that nationalization is an extreme measure that should be applied only on condition of fair compensation to former owners. They emphasize that the nationalization of property should not become a form of punishment, or even a way to coerce businessmen into fulfilling certain obligations.

Nationalization has always been a key issue in the political program of the Communist Party of the Russian Federation. It was also a cornerstone of the anti-crisis plan presented by party leader Gennady Zyuganov in 2016 as the platform for the parliamentary elections. Back then, Zyuganov said that privatization was absolutely essential for increasing budget revenues and preventing the outflow of hard currency from the country.

The presidential program of Communist Party candidate Pavel Grudinin also lists privatization of major enterprises as a key condition for future prosperity. “Our priority will be the prosperity of the general public… we will make Russia’s riches, its natural, industrial and financial resources serve its people; we will nationalize strategically important and systemic industries, the power sector, railways, communications systems and leading banks,” the document reads.

[TsarSamuil]

Inflation in Russia lower than America's for first time in history.

RT.com
16 Mar, 2018 09:25

Low inflation is not always good for the economy. However, for Russia, whose economy has been dominated by skyrocketing inflation after the collapse of the Soviet Union, it's a good sign.

Inflation in Russia now stands at 2.18 percent, and for the first time ever it is lower than US inflation, which is currently 2.2 percent. This is another record low for Russia. In 2017, consumer prices rose by only 2.5 percent. In 2016, there was 5.4 percent growth. Thus, inflation has more than halved in a matter of a couple of years.

Such low inflation is unprecedented for Russia. For almost a quarter of a century the economy has lived through much higher rates of consumer prices growth. In the 1990s there was hyperinflation typical for the poorest countries: 2,509 percent in 1992, 840 percent in 1993, and 215 percent in 1994.

The situation improved only in 2000, when prices rose by 20 percent. The last time inflation in Russia was double-digit was in 2015 – 12.91 percent. And this year, inflation is approaching just 2 percent, half of the Central Bank of Russia’s target of 4 percent per annum.

Analysts say this is good for the real economy and consumers.

“Low inflation benefits producers: at stable prices, they do not have to reconsider costs, and the cost of production does not change,” said Anna Kokoreva, deputy director of the analytical department of Alpari, as quoted by RIA Novosti.

Low inflation also leads to the cut of the key rate by the central bank, which leads to cheaper mortgage and loans both for business and consumers. Mortgages have been stagnant in Russia because of the economic crisis, but better offers from banks are gradually reviving the ailing sector.

Retail has also won from low inflation. In 2017, it grew 1.2 percent after drops of 5 and 10 percent in the previous two years respectively.

However, when inflation is low, the economy also faces the risk of deflation. Deflation is when the purchasing power of money is growing, and the prices of goods and services are gradually declining. The key risk of deflation is a slowdown in economic growth with subsequent stagnation.

“It's extremely difficult to get out of the trap. Japan has not been able to overcome deflation, which has significantly impeded its economy for a quarter of a century. Europe is facing the same problem,” Finam analyst Aleksey Korenev told RIA Novosti.

[TsarSamuil]

Russia’s Long Road Toward Resurgence.

South Front
Mar 17, 2018

[TsarSamuil]

Putin Makes Aggressive Move to Bust Up Monopolies, Warns Entrepreneurs Not to Abuse Their Position.

Vesti News
Apr 7, 2018



Only high treason could be punished more harshly than violating anti-monopoly rules. Vladimir Putin reminded the State Council how legislation developed in the countries that are now called market-based. Violating laws on competition causes enormous damage to the economy.

[TsarSamuil]

Putin to gradually cut military spending, boost education & infrastructure – report.

RT.com
24 Apr, 2018 02:32

Russia may see a hike in health care, education and infrastructure spending by around $162 billion in the next six years, with cuts in its military spending, according to a report on Vladimir Putin's plan for his term in office.

The 10 trillion rubles ($162 billion) spending plan has been under consideration for several months now and is expected to become a decree shortly after Putin's inauguration on May 7, sources familiar with the issue told the Bloomberg agency, on condition of anonymity.

The measure is aimed at achieving the "decisive breakthrough" in raising the living standards of the Russian population, which was promised by the President in his annual address last month. It's also an attempt to stimulate the growth of the country's' economy amid its slow recovery from recession and from Western sanctions, the sources said.

The funds allocated for construction and maintenance of roads, as well as other transport infrastructure, will increase by about a third, the people said. A 20 percent increase in spending on health care and education is also part of the plan, they added.

This means that Russia will be investing around 11.3 percent of its GDP in infrastructure, health care and education over the next six years, compared to the 9 percent it currently invests.

The increased spending in those areas will be compensated by cuts in others, including defense, as well as by possible tax hikes, according to the sources. A new 4 percent sales tax may be among the options, they said, adding that this measure hasn't yet been approved.

The allocation of the new funds may start this year, but the largest increases should be expected after 2020, the sources said. They also warned that the figures in the plan may still be adjusted in the coming days and could differ from the 10 trillion-ruble sum.

In January, Russia's Vedomosti newspaper also reported that the presidential administration and the relevant ministries were tasked with calculating the possibilities of increased spending on health care, education and infrastructure. According to the paper's sources, the idea was –among others– backed by presidential aide Andrey Belousov, and by the head of the Central Bank, Elvira Nabiullina, who said that structural reform would be required to support the measure.