Economic News in Review
Crisis, Commentary, and International Outlook
May, 2009

 

The following resource is meant to quickly introduce the reader to some of the major English-language commentary concerning the current financial crisis in Russia, how that crisis might affect Russia's government and ruling structure, and what the international outlook is for Russian business.

 

This news review is developed via a partnership between three organizations: The School of Russian and Asian Studies, a study abroad organization which also produces several other reviews ("obzori") each month; The US-Russia Chamber of Commerce of New England, a business advocacy and networking organization which also features this obzor in its monthly newsletters; and Alinga Consulting Group, a business services company (audit, tax, accounting, payroll, legal, and HR), which also offers a monthly newsletter.   

 

To subscribe to any of these additional news services, send us an email with "Subscribe" in the subject field and indicate which publications you would like subscribe to in the body of the email.

 

Agriculture / Food

 

Russia set to export record amount of grain this year

Russia will export a record amount of grain this agricultural year, the president of the Russian Grain Union said on Tuesday.

 

Desperate Russians won't turn up their nose at expired food

Retirees, living on limited pensions, forage Moscow back alleys for the best deals on past-their-prime, even slightly rotten or moldy, goods. They say these days they're competing with bigger crowds.

 

 

Automotive

 

Thanks for advice, Mr. Putin, but we prefer BMW

Despite the crisis Russian officials have not lost their taste for imported luxury cars. Vladimir Putin’s call to buy Russian autos fell on deaf ears, while local producers strive to survive.

 

Nissan opens first car plant in Russia

Russian Prime Minister Vladimir Putin and Nissan Motor Corp. president Carlos Ghosn presided over the opening Tuesday of the Japanese car maker's first plant in Russia, banking on the revival of the country's car industry despite the global financial crisis.

 

Germany Set to Deepen Ties to Russia With Opel Sale

Germany’s backing for a Russian- backed bid for General Motors Corp.’s Opel unit augurs deeper ties between Moscow and Berlin that may trump concerns of ex- Soviet nations squeezed between the two capitals.

 

Banking

 

Russian Bank Industry Can Survive $25 Oil, Stress Test Shows

Stress tests by the Russian central bank show the country’s lenders can weather a slump in the price of oil to $25 a barrel, provided external debt doesn’t rise above the current level.

 

At Russia's Alfa, Hardball Still Reigns

Downturn has chastened other oligarchs, but Mikhail Fridman hasn't eased aggressive tactics.

 

Russia Cuts Rates to Spur Growth on Stability Signs

Russia’s central bank cut the main interest rates for the third time in six weeks after government officials and policy makers suggested the economic slump in the world’s biggest oil supplier may have reached its low point.

 

Business Commentary

 

Barriers and bureaucracy - but must it be like this?

This country is vast and the opportunities here are extraordinary. And if you grew up or lived abroad in the US, the UK, Europe or parts of Asia, where the rules of the game are more or less understandable after centuries of capitalistic trial and error, it’s easy to spot new market niches or opportunities here which are still open to rapid development.

 

Russia's ailing economy. Red square blues

Russia’s failure to diversify away from oil should worry the Kremlin.

 

Russia's economy. A new sick man

The crisis is dire, but that does not mean that the Kremlin is about to lose control. On the contrary.

 

Currency

 

Weak Russia Economic Outlook Will Test Ruble

Russia's grim growth outlook suggests the coming months will see a fresh wave of ruble selling, economists say.

 

Ruble Extends Biggest Monthly Rally Since 1995; Stocks Climb

The ruble rose, extending its biggest monthly advance against the dollar since 1995, as oil headed for its best month in a decade. Stocks rallied to the highest level since September.

 

Russia says world needs more reserve currencies

The world needs a wider range of reserve currencies because the economic crisis in the United States has changed perceptions of the dollar, Russian President Dmitry Medvedev said in an interview published on Tuesday.

 

Hooked on the Dollar

The Russian Economy’s Close Relationship with the U.S. Dollar Has Brought Momentary Relief, but Comes with a Price Tag.

 

Domestic Policy

 

Rise in Oil Price Eases Push for Reform in Russia

Rising oil prices have turned around Russia’s prospects so quickly that economists are now warning of a different risk: the crisis may be too short.

 

Putin Plays Sheriff for Cowboy Capitalists

Prime Minister Vladimir V. Putin publicly chastised the three businessmen who jointly own the city’s lone factory, which has not paid its workers for the last three months.

 

Opening Remarks at Meeting on Economic Issues 

President Dmitry Medvedev held a meeting on economic issues. At the meeting participants discussed the preparation of a draft Budget Message for 2010 and the subsequent three years.

 

Russia's Medvedev raps ministers for gloomy forecasts

Russian President Dmitry Medvedev on Tuesday warned ministers who give gloomy economic forecasts that they should look for new jobs, a move widely seen as a rebuke to Finance Minister Alexei Kudrin.

 

Medvedev approves series of budget cuts

Dmitry Medevdev, Russia’s president, on Monday ordered the government to prepare for a continuation of the economic crisis into 2010, delivering a markedly pessimistic view of the country’s economy and mandating wide-ranging budget cuts until now put on hold.

 

Medvedev says no more bailouts, no more subsidies - experts on budget address

The budget address of the Russian president has sent a very important message to business and state-owned companies: there will be no more anticrisis measures or subsidies - instead anticrisis management should take their place.

 

Opening Remarks at Meeting with Government Cabinet Members and Chairmen of the Federal Assembly Upper and Lower Houses on Budget Policy in 2010-2012

Russian President Dmitry Medvedev presented the main budget policy outlines for 2010-2012, listed 10 priorities of the main budget outlines, which included fulfilling social spending commitments, reducing the budget deficit and raising the level of undistributed reserves.

 

Medvedev reaches out to Russia's struggling businesses

President Dmitry Medvedev reached out on Tuesday to Russian businesses hit hard by the downturn, as officials gave more stark warnings on the state of the economy.

 

Medvedev says diversification Russia's top task

Russian President Dmitry Medvedev says the main challenge facing his government is to diversify the country's economy.

 

Russian finance minister predicts 'inevitable' 2nd wave of crisis

Russian Finance Minister Alexei Kudrin said Friday it was inevitable that bad loans in the banking system would create a second wave in the financial crisis.

 

Medvedev says giant state corporations to go private

Russia's President Dmitry Medvedev said in an interview published on Friday that giant state corporations will inevitably be privatized.

 

Energy

 

Medvedev scolds Cabinet for dependence on energy

Russian president criticizes ministers for failing to diversify the economy away from energy.

 

The Time 100: Alexander Medvedev

If Alexei Miller, Gazprom's CEO, is the company's public face and conduit to the Russian political leadership, Alexander Medvedev, head of Gazprom Export, is its link to the outside world.

 

Russia sees no point in being party to Energy Charter – Putin

Russia sees no point in remaining a signatory to the 1991 Energy Charter, which it has not ratified, Prime Minister Vladimir Putin said Tuesday.

 

Foreign

 

Economic Crisis Set to Dominate Forum

Organizers of the annual International Economic Forum in St. Petersburg last spring boasted that the event is becoming “a second Davos,” a supreme showcase of Russia’s vast and diversified business potential.

 

Russia's customs union won't impede WTO bid - Shuvalov

Russia's efforts to create a customs union with neighbours Belarus and Kazakhstan will not impede the country's bid to join the World Trade Organisation (WTO), a senior Russian official said on Friday.

 

Time to Trade?

Improvements in U.S.-Russian political relations will be of little benefit to trade.

 

Things for investors to watch in Russia

A year after Dmitry Medvedev was sworn in as Russian president his relationship with Prime Minister Vladimir Putin is still under intense scrutiny by investors and Kremlin watchers.

 

World Bank May Lend Russia ‘Several Billions’

The World Bank may lend “several billions of dollars” to Russia in the next two years to bolster social programs as the international body forecasts a sharper economic contraction in the country this year.

 

Russian Support For WTO Membership Weakening – IMF

The International Monetary Fund expressed concern on Monday that Russia's desire to join the World Trade Organization had slackened after a series of delays.

 

Gas

 

Gas deal between Turkey and European Union breaks Russian stranglehold

The European Union and Turkey have struck a ground-breaking gas pipeline deal unlocking a potential energy bonanza in the Caspian basin after more than a year of deadlock, according to senior EU officials.

 

Ukraine's president approves Caspian oil route bypassing Russia

Ukrainian President Viktor Yushchenko has signed a decree approving a project to transit Caspian oil to Europe bypassing Russia, the presidential website said on Thursday.

 

Pipelineistan Goes Af-Pak

An immense energy battlefield extends from Iran to the Pacific Ocean. It's there that the Liquid War for the control of Eurasia takes place.

 

Gas Pipelines: South Stream Gets a Boost

Key countries sign on to Russia's South Stream project, giving it an edge over the rival Nabucco pipeline proposal in a race with geopolitical repercussions.

 

New Ukraine-provoked gas war coming

According to information updated exclusively by RussiaToday, despite Russia making advances, gas payment delays are likely to continue from Ukraine in the near future – and thus a new gas war will be its fault.

 

Russian Takes Reins at BP Venture

BP PLC asked one of its Russian billionaire partners to take over as acting chief of their TNK-BP Ltd. joint venture, a move observers said highlights the British giant's fading influence at the Russian unit after a bitter shareholder conflict last year.

 

Russia demands Turkmenistan cut price of gas

Russia's Gazprom has demanded that Turkmenistan cut either the price or the volume of its natural gas, Interfax reported on Monday, sounding another harsh note in an escalating dispute between the energy giants.

 

Indicators

 

Nabiullina Says Russian Economy May Shrink up to 8%

Russian Economy Minister Elvira Nabiullina said the economy may shrink as much as 8 percent this year, a steeper decline than the ministry forecast in January.

 

Crisis-battered Russian industry slows 16.9%

Russian industrial production plummeted 16.9 percent in the year to April, the government said Monday, reflecting the impact of the global economic crisis on the country's once-booming economy.

 

Russian economy to stagnate in 2010 – IMF

The Russian economy will not return to growth in 2010 after shrinking 6.5 percent this year due to the weak oil price and lacklustre capital inflows, the International Monetary Fund (IMF) said on Monday.

 

Investment

 

Russian Stocks, World’s Best Market, Climbs on China Demand

Russian stocks climbed for a fourth day, sending the Micex Index to a seven-month high, as record copper imports in China lifted mining companies and higher oil boosted energy producers.

 

Russia Will Always Be Cheap

"It is a riddle, wrapped in a mystery, inside an enigma." That's how Winston Churchill characterized Russia 60 years ago. Little about its mystique has changed.

 

As Economy Struggles, Russia’s Market Has Surged

Despite continuing weakness in the Russian economy, the stock exchange here has surged to become the best performing in the world, after being the worst last fall.

 

Russia Stocks Surge Most in World as UBS Sees Further 30% Rally

Russian stocks gained the most among equity markets worldwide after UBS AG predicted a 30 percent surge for shares that have almost doubled this year.

 

IT

 

Russian Firm Invests $200 Million in Facebook

Facebook has gotten $200 million from a Russian investment group in exchange for a small stake in the nation's largest social networking company.

 

Putin urges innovation to revive Russia

Russia must focus on technology and innovation to modernize its economy or risk falling behind other world powers, Prime Minister Vladimir Putin said on Wednesday.

 

Labor

 

Russian Economy Dramatically Impacted by Economic Downturn

Unemployment is increasingly raising its profile in Russia’s crisis-hit economy.

 

Russia's Factories Gear Up for Efficiency

Some companies have hired Western consultancies to help redesign Soviet-era plant floors, cut costs, and boost productivity. It's working.

 

Russian recession roars on as 200,000 lost jobs

Russian data on Friday showed it is too soon to call the bottom on the country's first recession in a decade, with unemployment rising to a 9-year high as 200,000 lost jobs in April and retail sales slumped for a third month in a row.

 

Jobseekers shun Moscow and head for the country

The fight for work in the Russian capital is intense so Muscovites are looking to the provinces for employment and success… and a less expensive way of life.

 

Mining

 

Russia signs uranium contract with US companies

Russia's uranium export company signed a groundbreaking $1 billion package of contracts Tuesday to supply three U.S. utilities with enriched fuel for nuclear power plants, Russian atomic industry officials said.

 

Russia to woo investors with bigger mineral licences

Russia, which earned over $3 billion selling off its mineral resources last year, will group licences into larger blocks to attract cash-strapped investors in 2009.

 

Retail

 

Russia's top retailer says Wal-Mart coming soon

Russia's top grocer, X5, expects Wal-Mart to come to Russia soon and believes the U.S. giant has ambitious plans for the national market, X5 Chief Executive Lev Khasis said on Thursday.

 

Wal-Mart May Expand Into Russian Retail Market, Treasurer Says

Wal-Mart Stores Inc., the world’s largest retailer, may expand into Russia to take advantage of its fragmented retail market and sell merchandise more cheaply, Treasurer Charles Holley said.

 

Travel

 

Crisis Hits Russians’ Plans for Travel

As the financial crisis threatens the tourism industry in Russia just as everywhere else, vacation plans have become the first thing people are ready to change in order to save money.