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[loganair] 10/2/2018 11:05

The Surprising Success of Putinomics:

Today, Russia’s economy has stabilized, inflation is at historic lows, the budget is nearly balanced, and Putin is coasting toward reelection on March 18, positioning him for a fourth term as president. Putin has recently overtaken Soviet leader Leonid Brezhnev as the longest-serving Russian leader since Joseph Stalin. Economic stability has underwritten an approval rating that hovers around 80 percent. Putinomics made it possible for Russia’s president to survive repeated financial and political shocks. How did he do it?

Russia survived the twin challenges of the oil price crash and Western sanctions thanks to a three-pronged economic strategy. First, it focused on macroeconomic stability—keeping debt levels and inflation low—above all else. Second, it prevented popular discontent by guaranteeing low unemployment and steady pensions, even at the expense of higher wages or economic growth. Third, it let the private sector improve efficiency, but only where it did not conflict with political goals. This strategy will not make Russia rich, but it has kept the country stable and kept the ruling elite in power.

Start with macroeconomic stability. Russia is a relatively rare kleptocracy that gets high marks from the IMF for its economic management. Why? Since the beginning of Putin’s time in office, he and the Russian elite more generally have prioritized paying down debt, keeping deficits low, and limiting inflation. Having lived through devastating economic crashes in 1991 and 1998, Russia’s leaders know that budget crises and debt defaults can destroy a president’s popularity and even topple a regime, as Boris Yeltsin and Mikhail Gorbachev both discovered.

When Putin first took power, he devoted much of Russia’s oil earnings to paying back the country’s foreign debt ahead of schedule. In the current crisis, Russia has slashed spending on social services to ensure that the budget remains close to balance. In 2014, oil and gas earnings constituted around half of Russia’s government budget. Today, oil trades at half the 2014 level, but thanks to harsh budget cuts, Russia’s deficit is around one percent of GDP—far lower than in most Western countries. Putin has supported Russia’s central bank as it has hiked interest rates, which has limited inflation but also stifled growth. The Kremlin’s logic is that Russian people want economic stability above all else. Russia’s elites, meanwhile, know they need stability to retain their hold on power. To ensure macroeconomic stability, the Kremlin has implemented a harsh austerity program since 2014, but there have been few complaints.

The second prong of Putin’s economic strategy has been to guarantee jobs and pensions, even at the expense of wages and efficiency. During the economic shock of the 1990s, Russian wages and government pensions often went unpaid, causing protests and a collapse in President Boris Yeltsin’s popularity. When the recent crisis hit, therefore, the Kremlin opted for a strategy of wage cuts rather than allowing unemployment to rise. Consider the difference in most Western countries. After the 2008 crash, unemployment spiked in the United States, but people who weren’t laid off did not experience sharp salary cuts. In Russia, by contrast, unemployment increased by barely one percentage point. But in 2015, wages fell by nearly ten percent. Business owners, who control their firms only with the Kremlin’s consent, got the message. Wage cuts were tolerated, but factory closures or mass layoffs were not.

This is far from an efficient policy, given that many Russians still work in Soviet-era factories that are in decline and have no hope of revival. In economic terms, it would be better to move these workers to more productive firms. But doing so is politically impossible given the layoffs it would require. Most sectors of the Russian economy face political pressure to employ unneeded workers, even if they don’t pay them much. This fits the Kremlin’s political calculus: Russians don’t usually protest salary cuts, but layoffs and factory closures will bring them onto the streets. Social policy is governed by the same logic. In the past, Russian pensioners have rallied to demonstrate against pension cuts. And so the government underfunds health and education but keeps pensions steady—evidence that the Kremlin values pensions’ contribution to political stability more than it regrets the extent to which poor schooling impairs medium-term growth.

The third prong of Putinomics is to let private firms operate freely only where they do not compromise the Kremlin’s political strategy. The large role that oligarch-dominated state-owned firms play in certain key sectors is justified in part by their willingness to support the Kremlin in managing the populace by keeping unemployment low, media outlets docile, and political opposition marginalized. The energy industry, for example, is crucial to the government’s finances, so private firms have either been expropriated or wholly subordinated to the state. Steel firms are less important, but they, too, must avoid mass layoffs. Service sector firms, such as supermarkets, have no such political role. “When it comes to politics,” supermarket magnate Sergei Galitsky has explained, “I sit down on the sofa and grab some popcorn—or sometimes I crouch down in order not to get shot.” Bosses of energy firms cannot afford to ignore politics. Usually they are the ones shooting. Given these political constraints, what hope does Russia’s private sector have of improving efficiency or driving economic growth? Some, but not much. This, too, fits the Kremlin’s logic.

[quepassa] 10/2/2018 11:03

Loganair.

Your view please.

Is JRS a BUY at these levels? It's back to where it was a year ago. Oil price very weak.

Don't feel obliged to respond!

QP

[loganair] 10/2/2018 10:51

Usually when the interest rates go up, the countries exchange rate strengthens and when the interest rate goes down the exchange rate weakens.

Note when the Russian Central Bank reduced interest rates how the Rouble strengthened.


Russia's FX reserves are now a little over $449bln and are expected to continue to rise to around $470bln by mid year and could reach the Central Banks goal of $500bln by the end of 2018.

[quepassa] 10/2/2018 10:48

Thanks!

& belated Happy New Year.

QP

[riskvsreward] 28/1/2018 13:24

discount-dogged-jpmorgan-russian-to-buy-6%-of-its-shares


hxxp://citywire.co.uk/investment-trust-insider/news/discount-dogged-jpmorgan-russian-to-buy-6-of-its-shares/a1086684?re=52022&ea=238665&utm_source=BulkEmail_Money_Weekly&utm_medium=BulkEmail_Money_Weekly&utm_campaign=BulkEmail_Money_Weekly

[riskvsreward] 28/1/2018 13:24

discount-dogged-jpmorgan-russian-to-buy-6-of-its-shares


hxxp://citywire.co.uk/investment-trust-insider/news/discount-dogged-jpmorgan-russian-to-buy-6-of-its-shares/a1086684?re=52022&ea=238665&utm_source=BulkEmail_Money_Weekly&utm_medium=BulkEmail_Money_Weekly&utm_campaign=BulkEmail_Money_Weekly

[loganair] 03/1/2018 12:44

I have read many similar predictions when it comes to the price of oil...anywhere near this will see Russia with a budget surplus.


"Oil is in a bull market and the world hasn’t realised it yet. In 2018 it will start to wake up to the fact, as Brent crude makes three-year highs. I have to say, I think $85 or even $90 a barrel are possible, but I don’t want to get carried away. So I’ll say – highs above $80. The lows? I doubt it goes below $50".

[loganair] 28/12/2017 23:28

The year was surprisingly “stable” from an economic perspective:

During the year that is now coming to an end, the Russian economy has demonstrated unprecedented growth of about 1.5% (which corresponds to 1.2-1.4 trillion rubles, based on the last year’s GDP of 85.9 trillion rubles).

Russian exports of oil and gas grew by at least $23.5 billion (or 1.35 trillion rubles, equivalent to nearly 10% of budget revenues).

The Central Bank of Russia, whose efforts to clean up the banking system have finally born fruit. Nabiullina’s team has outdone itself: the stars of Yugra, Otkritie, B&N Bank and Promsvyazbank, not to mention a whole constellation of smaller banks, have disappeared from the banking skyline within a year.

Unlike Russian politics, which has no place for an opposition and where all decisions are made by a single person, the unprecedented economic stability is the result not of the cessation of all internal movement, but its activation.

And that is why it still seems to that in the very near future, it will not be political changes to push economic reforms forward; rather, significant shifts in the economy will accelerate political reforms. And this is what we learn from the year that is drawing to a close: a stable but troubled year.

[loganair] 27/12/2017 15:43

The rouble rose 0.3 percent for a sixth straight day of gains, shrugging off fears of more Western sanctions and opposition calls for boycotting 2018 presidential elections after leader Alexei Navalny was barred from contesting.

But the rouble could firm further if the fear of sanctions persuades Russian businesses to repatriate cash held abroad. President Vladimir Putin has suggested such repatriations could be absolved of profit tax and also allowed to invest in special bonds.

Russian local debt yields - currently near two-month lows - could also fall if the Treasury cuts planned issuance in favour of hard currency debt.

Chris Weafer of Macro-Advisory, a consultancy, predicted “a much more energetic and news-filled six-month period, starting in early February until late July” for Russia.

VTB Capital’s Maxim Korovin noted net long rouble positions according to the latest CFTC report, were at the highest levels of 2017.


As JRS is denominated in pounds, the strengthening rouble hopefully will lead to an increase in JRS share price.


Economic outlook - China seen to slow down, while Brazil extends recovery.

Markets have their eye on - Brazil stocks are the most favoured while India is 3rd and Russia 5th.

[loganair] 13/12/2017 09:45

Last month, the Russian parliament approved the draft of a conservative 2018-2020 Russian federal budget at $279 billion. This included increased spending in the social sector, a higher minimum wage, and increased salaries for teachers and healthcare workers.

The draft budget assumes the price of oil will stay around at least $40.80 a barrel during the next few years. In fact, it may actually rise from its current $61.03 for the OPEC basket. Of course, that would boost Russia’s reserves.

Manufacturing in Russia has actually grown in absolute terms during the past decade along with a slight rise in GDP. Contrary to Western perceptions, energy revenue in Russia amounts to only around 30 percent of the federal budget. In absolute terms, it actually fell from 2014 to 2016, while non-oil and gas income has increased steadily since 2009.

As for exports, oil accounts for around 26 percent of Russia’s GDP. Oil and gas as a percentage of total exports fell during the past two years from 70 percent to 47 percent, but they are still the country’s top export money earners. When you add other commodities, such as iron, steel, aluminum and copper, revenue from natural resources come to more than 75 percent of Russia’s total exports.

But the key problem ahead for the country is the debt of provincial governments, and not defense, which is much lower than during Gorbachev’s reign in the late 1980s.

[loganair] 07/12/2017 13:09

Inflation in Russia remains at the lowest level since the collapse of the Soviet Union, falling to 2.5 percent in November. Given the low inflation, the central bank plans to gradually cut the key rate to 6-7 percent per annum from the current 8.25 percent.

[loganair] 01/12/2017 09:30

I haven't mentioned for some time how are some of JRS top 10 Largest holdings doing...

Gazprom is more expensive than Rosneft:

By 15.00 on Thursday, the capitalization of Gazprom based on its quotations on the Moscow stock exchange was 3.168 trillion rubles, and Rosneft - 3.088 trillion. By the close of trading, Gazprom lost 1%, its capitalization dropped to 3,128 trillion rubles, while Rosneft went up and cost 3.111 trillion rubles. Gazprom's reporting influenced the quotes, which is why the local leader changed in terms of capitalization.


Gazprom set a record for gas exports to the Euro in November in 626 million cubic meters per day:

"Gazprom" on the eve of the winter the third day in a row sets records for gas exports to Europe, the Russian gas holding company said. "On November 29, Gazprom set the third for this week's record of the daily volume of gas exports to non-CIS countries for November and the fourth quarter. Consumers were delivered 626 million cubic meters. m of gas."



"Lukoil" revised the forecast for the growth of hydrocarbon production in 2017 to 2.5%:

Lukoil revised its forecast for the growth in hydrocarbon production in 2017 to 2.5% from 1-2%, projected in May, follows from the presentation of the company presented during the conference call. The plans for 2017 indicate: "The growth of hydrocarbon production by about 2.5% due to the increase in gas production." In March, before the extension of the agreement with OPEC on the reduction of oil production, the company forecasted an increase in hydrocarbon production by 3-4%.


"Aeroflot" significantly reduced profitability for 9 months

The exchange rates and the volume of supply of capacities in the aviation market led to a decrease in interest rates compared to the same period last year, explains the decline in profits of the deputy director of Aeroflot Shamil Kurmashov, whose words are included in the release of the company. Also this year, fuel significantly increased in price, the situation with it was normalized only in the III quarter, in addition, operating expenses increased because of rising costs of labor and investment in product quality.

[loganair] 25/11/2017 17:51

Russia’s economy is on track for a full year of growth. Inflation is slowing. The central bank has been replenishing its reserves of hard currency and the country is finally emerging from a difficult recession.

Value of gold in Russia’s international reserves managed by the central bank increased to $73.7 billion as of Nov. 1 from $60.2 billion at the beginning of the year, the central bank data showed earlier this week.

Figures discussed on Friday at Mr. Putin’s meeting with government and central bank officials showed strong consumer demand, a main driver of the growth. Retail sales for the month increased 3 percent compared with a year before, according to the state statistics service. The Finance Ministry projects the overall economy to grow 2.1 percent for the year. That would be Russia’s first full year of economic growth since a recession began in 2014.

Other economic indicators have been trending in the same direction. Inflation is expected to be about 4 percent for 2017, low by recent Russian standards. As recently as 2015, official figures showed consumer prices were rising more than 15 percent, and ordinary Russians were feeling the pinch. The cost of Russian staples was rising: The price of bread, an important product because of its mythologized status in the Soviet period as a symbol of well being, increased about 11 percent a year during the recession, according to the state statistics agency.

But as the price of oil, a major export commodity, has recovered from multiyear lows in 2014, Russia’s central bank has resumed purchases of hard currency. It has been replenishing the reserves its uses to maintain the long-term stability of the ruble.

“It’s a broad recovery, and it will continue,” said Vladimir Osakovsky, chief Russia economist at Bank of America Merrill Lynch. “There is strong fundamental support.”

The country certainly faces challenges, Mr. Osakovsky and other analysts say. It remains vulnerable to swings in the price of oil and natural gas, for example. The two commodities account for about 60 percent of export revenue and 50 percent of the federal government’s tax base, and a sudden drop in prices could expose wider issues with the economy.

Experts also worry that Russia’s banking system is vulnerable. The central bank had to nationalize two midsize private lenders this year, and several banks lost money betting against the ruble in recent years, according to Vladimir Tikhomirov, chief economist at BCS Global Markets, an investment bank.

“So far, the central bank has managed to keep the banking system working,” Mr. Tikhomirov said. But, he added, “the cost of saving these banks is growing.”

Still, positive news has been trickling in.

In September, Fitch, the credit rating agency, revised its outlook for Russian sovereign debt to positive from stable. Through the year, foreign investors have piled into Russian government bonds, raising the share of Russian debt held by foreigners to more than 30 percent, up from 5 percent.

Also helping the recovery was government spending on major infrastructure projects, including a bridge across the Kerch Strait to Crimea, a major gas pipeline to China called the Power of Siberia, and soccer stadiums for the World Cup, which Russia will host next year.

That has helped the country overcome Western sanctions imposed during the Ukraine crisis and over meddling by Moscow in the 2016 election in the United States. These “smart sanctions” were in any case narrowly targeting companies and businessmen aligned with Mr. Putin, meant to affect Kremlin insiders and not to slow the overall economy or hasten political change.

Spurring growth beyond the 2 percent region forecast by the government will not be easy, though.

The country will very likely have to agree a series of major economic overhauls in order to bolster its long-term growth potential. The retirement age — currently 55 years for women and 60 years for men — will have to be raised, economists say. Without such changes, expansion will remain capped at its current levels, Russia’s central bank chairwoman, Elvira S. Nabiullina, warned this month.

“Without reform,” Mr. Tikhomirov said, “the future for Russia will be fairly bleak.”

[loganair] 10/11/2017 10:09

Russia-ASEAN Relations: Where Are They Headed? – Analysis by Chris Cheang is Senior Fellow with the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.


Prospects for the foreseeable future of Russia-ASEAN relations are questionable, based on current trends unless Russia accords it the time, energy and resources it needs.


Russia-ASEAN relations are likely to develop in a slow, incremental fashion over the next few years. There are reasons for adopting a doubting Thomas approach. To begin with, unlike China and the US, Russia has had no tradition of strong relations with Southeast Asia. Except with Vietnam and Indonesia in the 60s, Moscow’s links with the region had been little to speak of.

Secondly, without meaningful economic/trade ties no mutually beneficial relationship can develop. According to the ASEAN Secretariat, as of November 2016, ASEAN’s total trade with Russia amounted to a mere US$13.3 billion, in contrast with China (US$345 billion) and the United States (US$212 billion). Even President Putin noted this “modest figure compared to trade with other countries in the Asia-Pacific region” during his speech at the Russia-ASEAN Summit in Sochi in May 2016.

Weak Fundamentals - Other Factors:

Thirdly, the necessary time, energy and resources have not been fully devoted to developing the relationship with ASEAN. Russia’s leaders and top businessmen were, are and will remain Euro- and US-centric; the “Asia-Pacific” that matters to them is really China, Japan, and South Korea.

Russia’s top trading partners in 2016 were the Netherlands, China, the Federal Republic of Germany, with South Korea and Japan in 7th and 10th place respectively. It is difficult to conceive this pattern changing with respect to ASEAN in the next five, or even 10 years.

Finally, managing the current tensions in Russia’s relations with the US and the European Union, the Ukraine and Syrian crises, as well as relations with China, will occupy most of Russia’s attention for the next few years.

President Putin is expected to emerge the victor in the 2018 elections. His energy, attention and focus for the six years after that, will be concentrated on consolidating his legacy, being the longest-serving Russian leader, apart from Stalin.

If he devotes any time to foreign affairs, it would be focused on the areas critical to Russia’s foreign policy such as the US, Ukraine and Syria. ASEAN cannot hope to be on his foreign policy agenda.

Economic Challenges Ahead:

The most important challenge is to realise the economic potential in the relationship. The Overview of ASEAN-Russia Dialogue Relations dated October 2017 provides a guide to the direction of the relationship. While socio-cultural and politico-security cooperation has been moving forward, it is the economic aspect which will drive the overall relationship into the future.

In his Sochi speech, President Putin highlighted cooperation in projects in agriculture; oil and gas production; joint technology and innovation alliances; fuel and energy; mining; railway construction; and Russian GLONASS satellite navigation system. It remains to be seen whether the projects will bear fruit.

Given Russia’s role as top energy exporter worldwide, Putin argued that Russia could satisfy ASEAN’s growing electricity needs by supplying energy on a long-term basis, and also offered ASEAN Russia’s new-generation nuclear power plant projects. Indeed, the Overview also noted that “energy is viewed as a promising area for cooperation between ASEAN and Russia”, including civilian nuclear energy.

Reservations in Relations:

However, here one encounters some reservations. Firstly, some ASEAN countries themselves are energy producers and exporters (Indonesia, Malaysia and Brunei). Secondly, nuclear power as a real alternative to fossil fuels and renewable energy has yet to take firm root in ASEAN.

Indeed, Dr Sanjay Kuttan, Programme Director in the Energy Research Institute of Nanyang Technological University rightly pointed out that given the high cost and safety concerns, “nuclear power will not feature soon in ASEAN’s energy mix for at least the next 20 years”. In any event, Russia would certainly face stiff competition from the US, Japan and EU in the nuclear power plant business.

Thirdly, with respect to cooperation in promoting renewable energy, there have been conflicting signals from Moscow. Igor Sechin, head of Rosneft, a leading Russian oil producer, said in an interview with Russian daily Izvestia in June 2017 that “the renewable sources of energy are yet unable to provide the necessary volume to substitute the traditional energy resources and sustainable energy supply.

This assessment by Sechin, a member of Putin’s inner circle, raises the question whether Russia could be relied upon to promote renewable energy and for that matter, become a reliable partner for ASEAN in this area.

Finally, an energy expert at the recent Singapore International Energy Week forecasted that within the next 10 years, gas and hydro-electric power would meet most electricity needs with solar contributing as well; in the longer-term, coal and gas consumption would decline, resulting in massive growth in solar, hydro, onshore and off-shore wind sectors and two-thirds non-fossil fuels making up the energy mix.

If this forecast can be relied upon, then one must cast doubt on assumptions that Russo-ASEAN energy cooperation would be feasible in the long-term.

The one bright spot in Russia’s economic links with ASEAN is weapons sales. According to a March 2017 Chatham House report, “Asia is by far the most important export market for Russian arms”. China and India constitute 56% of all Russian weapons exports from 2000-2016; however, Vietnam accounted for 5.6%, Myanmar 1.4%, Malaysia 1.3 % and Indonesia 1.1%.

However, weapons sales cannot become a strong foundation of ASEAN’s relationship with Russia, given its one-dimensional nature. Moreover, the US still remains a major source for ASEAN. Finally, any continued and growing Russian weapons sales to Vietnam runs the risk of antagonising China.

What Next?

To raise the level of economic interaction requires more high-level commitment of the political and business leadership of both sides. ASEAN must pose this question: what role does, or should, Russia play in ASEAN’s overall development in the political, economic and strategic spheres?

Russia too might pose the same question; a bird’s-eye view of its place in ASEAN’s development would help it formulate the strategic dimensions of its relationship with ASEAN and devote the necessary attention and resources to raise the economic aspect of its links. Russia cannot lose as ASEAN is a fast-growing region.

The experienced and committed ASEAN experts in Russian foreign policy-making and academia are likely to continue pushing for a more meaningful relationship based on substance, particularly in the economic/trade field. It remains, however, an open question whether they would be able to exercise enough influence on their top political and business leaders to make the necessary decisions.

[loganair] 10/11/2017 09:46

Can emerging markets maintain their momentum? By Graham Smith:

When markets surprise, they have a habit of doing so in a big way. This wasn’t supposed to be a great year for emerging markets but, so far, it has been. The MSCI Emerging Markets Index went up by almost a third in US dollar terms over the ten months to the end of October¹.

Rising interest rates in the US have the potential to apply a substantial headwind to emerging markets. They make it relatively more attractive for global investors to plant their money in US assets and avoid the additional risks associated with smaller, developing countries. At the same time, higher US rates make it more expensive for nations dependent on foreign loans to service their existing debts and borrow more.

As always though, we find ourselves somewhere between two big pulls. On the other end of the rope this time is economic growth. In a developed world where growth of 2% to 3% is considered strong enough to withstand rises in interest rates, the International Monetary Fund’s expectation that emerging markets will continue to grow at a rate of about 5% per annum looks impressive².

So where is the growth coming from? For a start, China seems on course to expand by about 7% this year. While that’s a big step down from the 10% growth rate we saw earlier this decade, it’s still enough to belie some extraordinary progress. Online sales of physical goods were 29% higher in the nine months to September compared with the same period in 2016.³

That’s good news for the host of nearby countries that send exports to China. Malaysia, for instance, which sells components used in the latest generation Apple and Samsung smartphones, said last week that exports to China were up 27% year-on-year in September⁴.

Then there’s Brazil, in a much weaker position, but with prospects improving. Following a damaging two-year-long recession, a rebound in consumer spending stabilised the economy in the first half of this year ⁵.

India, almost the world’s fastest growing large economy in fiscal 2016-17, has slowed as the country absorbs the combined impacts of last year’s cancellation of high value bank notes and the introduction this year of a national goods and services tax. However, these effects are only expected to be transitory, turning positive for the economy longer run according to the World Bank⁶.

Since corporate earnings have broadly grown in step with stock market gains this year, emerging markets continue to look attractively valued on a relative basis. At the end of last month, the MSCI Emerging Markets Index traded on 16 times the earnings of the companies it represents, and at a 23% discount to world markets generally.

That valuation gap is more or less maintained when using forecast earnings – 13 times for emerging markets versus 17 times for the world⁷.

You could, perhaps, explain away these mismatches by the risks that remain. Capital has continued to flow into emerging markets, even as US interest rates have gone up. As in the period 2003 to 2006, emerging markets are enduring rising rates, partly because those rises have coincided with healthy global growth⁸.

However, that could still be undone by any factor that sees the US dollar returning to favour, particularly if that factor involves a rise in geopolitical stress or unexpected deterioration in the world growth outlook.

That would place renewed pressure particularly on countries with US dollar currency pegs and large debts. Malaysia would be one – its banks are highly dependent on dollar funding⁹.

As usual, investors seeking to add growth from emerging markets to their portfolios might do well to spread their risks. Fortunately, emerging markets are a heterogeneous mix, with commodity producers like Russia, Indonesia and South Africa included alongside the increasingly consumer oriented markets of China and India.

[loganair] 24/10/2017 09:52

Russia’s economic growth can accelerate to 4-6% per annum in 2021-2030, according to the Russian Academy of Sciences’ report ‘Structural investment policy aiming at sustainable growth and economic modernization’.

In order to reach this level of the GDP growth, it is necessary to bridge the biggest structural gaps

"At the first stage the main task is to ensure economic recovery through a complex of tactical short-term measures triggering production growth and reducing destabilization risks in economic activities (doing business). The next stage of economic growth implies an increase in growth rates and step changes at all levels of the economic system, which according to our estimations make it possible to reach average annual GDP growth of 3.2-3.5% in 2017-2020, 4-6% in 2021-2030, and 3-3.5% in 2031-2035," the report says.

According to the authors, in order to reach this level of acceleration in GDP growth it is necessary to bridge the biggest structural gaps, mainly between sectors of the economy with financial resources and those lacking them, without which it is hardly possible to ensure an appropriate macroeconomic dynamics.

Russia’s Economic Development Ministry projects a 2.1% GDP growth for 2017 (up from 2% announced earlier), 2.1% for 2018, 2.2% - for 2019, and 2.3% for 2020. Earlier the ministry said the country’s economy would add 1.5% each year in 2018-2020.

[loganair] 20/10/2017 09:12

Interesting, QIA and Glencore have sold 14.16% of their 19.5% stake they hold in Rosneft to CEFT China energy leaving QIA still holding 4.7% and Glencore just 0.5% stake and thereby Rosneft strengthening relations with the Asia Pacific countries and, in particular, with China.

Rosneft has also just bought a 60% stake in Kurdistan’s main oil pipeline. Rosneft say "their purchase is to enhance the efficiency of oil transportation to the end customers including supplies to the company’s refineries in Germany.”


When it comes to the Nord Stream 2 pipeline carrying gas from Russia to Germany, Germany say they believe the EU shouldn't get involved and doesn't want to grant the EU a negotiating mandate.

German Chancellor Angela Merkel, who has said there is no need for a separate mandate for the EU executive. Austria which will also be an end user of the Nord Stream 2 is fully backing Germany while the EU say "concerned the Nord Stream 2 pipeline across the Baltic Sea will increase the bloc’s reliance on Russian gas and cut gas transit revenues for Ukraine, damaging its fragile economy."

Two things are very noticeable, firstly it shows that Germany is really running the EU and basically gets what it wants while other counties have to knuckle under to what the EU say and secondly the Germans do not give a damn about the Ukrainian's and have never really done so.

[loganair] 13/10/2017 14:37

The rush to invest in Russia by Andrew Van Sickle

Investors are joining the Russian party:

Russia has been out of fashion among global investors for several years. The longest recession this century, caused by the collapse in oil prices in 2014 and exacerbated by US and EU sanctions, badly dented its appeal. But things are looking up. As Steve Johnson points out in the Financial Times, Russia is now the largest overweight position in the average emerging-market fund, which holds 1.46% more Russian stocks in its portfolio than the benchmark MSCI Emerging Markets index.

Why the turnaround? It’s partly because the previous emphasis on long-standing favourite India looks overdone. In Russia, by contrast, stocks are cheap and the economy is slowly recovering; in the second quarter, year-on-year GDP growth reached 2.5%, a three-year high. Consumers, shell-shocked by a protracted squeeze on real wages amid a slide in the rouble, have regained some confidence. In the oil sector, companies have been forced to develop their own drilling technology as sanctions thwarted access to foreign expertise. Some domestic firms such as cheesemakers have been boosted by the absence of imported competition, thanks to Russian counter-sanctions. Corporate profits have started to climb after a long decline, says Johnson.

The oil-rich years were a good chance to implement structural reforms in order to bolster long-term growth, but they were squandered. “From weak institutions to a poor business climate, the choke points” holding Russia back are well known, but constantly ignored.

[loganair] 13/10/2017 14:34

Russia and Germany continue economic cooperation despite existing challenges in the political area the mutual trade between Russia and Germany has grown by 25% this year.

The trade turnover in 2016 amounted to $40.7 bln, direct accumulated investments made by German companies in the Russian economy reached $18 bln.

This year, bilateral trade grew by 25% and investments in the first quarter alone amounted to $312 mln, while investments for the whole 2016 were $225 mln.

More than 5,000 enterprises with the participation of German capital operate in Russia employing 270,000 Russian citizens. The turnover of those companies exceeds $50 bln.

Despite all existing challenges in the political area the economic relations with the Federal Republic of Germany are not fading away. Although China has outpaced Germany in terms of trade turnover with Russia, the latter still takes a significant share of Russia’s trade.

[its the oxman] 06/10/2017 10:00

Looking a bit more perky here. Still a way to go to reach previous 560p high.