Economic News in Review
Crisis, Sectors, and Domestic Policy in Russia
October, 2009

 

Agriculture / Food

 

Russia Launches Purge On Beer

A Russian proposal to ban outdoor beer sales sent brewery shares tumbling.

 

Auto

 

Taking Older Vehicles Off The Road Promises To Be Rewarding

By the beginning of next year, residents of Moscow and its nearby suburbs will not have a problem scrapping their old vehicles. In addition, turning in their old “clunkers” for recycling will actually benefit car owners.

 

Banking

 

Russia’s Rating At Risk As Era Of Deficits Looms

Russia risks returning to a period of entrenched budget deficits that may threaten its credit rating and weaken the ruble as it struggles to emerge from its first recession in a decade.

 

Business Commentary

 

Russia’s Development Path. Main Principles Have Been Identified, But Progress Is Slow

Drifting or planning? One of the criticisms levied at Russia is that it remains far too dependent on and, therefore, vulnerable to earnings from commodities.

 

Tycoon Rails Against Russia's "Permanent Crisis"

Russia can only overcome a 'permanent crisis' of aging infrastructure and rampant corruption with a major Kremlin-backed reform program, billionaire businessman Alexander Lebedev said on Monday.

 

Don't Write Off Russia From BRIC

Skeptics who say the BRIC idea is dead because the Russian economy has fallen much sharper than its emerging market peers will be proved wrong as Russia will show solid growth in the long-term, Russia's Finance Minister said on Monday.

 

Global Warming Could Deprive Russia Of Control Over Northern Sea Route

Global warming, which Moscow had expected to give it a dominant voice over expanded North Sea Route shipping, appears to be taking place so fast, Russian officials now say, that ships belonging to other nations will be able to pass north of their country’s 200-mile economic exclusion zone.

 

Currency

 

Ruble Devaluation Won’t Fix Russia’s Woes, EBRD Says

A ruble devaluation won’t solve Russia’s economic problems as the world’s largest energy exporter faces “a very difficult next couple of years,” said European Bank for Reconstruction and Development Chief Economist Erik Berglof.

 

Russia's Inflation Is Far From Dead

It's a miracle! Inflation in Russia has been vanquished. Russia's monthly inflation rate was a nice round zero in August.

 

Domestic Policy

 

Infrastructure Collapse: Allegation Or Reality?

The service life of the Soviet-made infrastructure has expired, and is going to start tumbling down. The accident at the power plant is just a prelude to a whole series of other man-made disasters.

 

Russia May Cut Rates This Month After Economy Slumped

Russia’s central bank may cut its key interest rate this month for the sixth time since it started easing policy in April after output contracted at a record pace and as the economy faces a slow recovery, a survey showed.

 

Creaking Infrastructure Evident From Siberia To The Streets Of Moscow

The accident has highlighted Russia's faltering infrastructure and the government's faltering attempts to deal with it.

 

Russia Remains Committed to Free Market Amid Crisis, Putin Says

Russian Prime Minister Vladimir Putin pledged his commitment to free markets and defended the government’s performance during the worst economic crisis in a decade.

 

Putin Pledges Lesser State Role In Russian Economy

Russian Prime Minister Vladimir Putin pledged Tuesday that the state's role in the economy would decrease in the coming years, as he touted the post-crisis Russia to investors.

 

In Russia, Business World Still Lacks Transparency

Doing business in Russia remains complicated and risky, and getting information about a prospective partner can be difficult.

 

Crisis Highlights Uncompetitiveness Of Russian Economy – Medvedev

The Russian economy has proved uncompetitive in the context of the crisis, Medvedev explained.

 

Russia Needs To Change National Psychology – Medvedev

Russia needs to change national psychology, President Dmitry Medvedev told CNN.

 

Foreign

 

US Vows To Support Russia's Entry Into WTO

Washington is eager for Russia's entry into the World Trade Organization, and promised Monday to offer "constructive support" toward that end, US trade representative Ron Kirk said.

 

Russian Tycoon To Buy Nets, Move Team To Brooklyn

Russian tycoon Mikhail Prokhorov reached an agreement Wednesday to buy 80 percent of the financially strapped New Jersey Nets and nearly half of a project to build a new arena in Brooklyn.

 

Russian's Bid For US Team Raises Hackles At Home

Russian tycoon Mikhail Prokhorov's bid for the New Jersey Nets may be a boon to the troubled U.S. basketball team, but in Russia some legislators and analysts say it's a blow to the country's sports.

 

Gas and Oil

 

Ukraine To Raise Russian Gas Transit Fee By 65-70% In 2010

Ukrainian Prime Minister Yulia Tymoshenko said on Thursday that Kiev would raise Russian natural gas transit fees by 65-70% in 2010, depending on oil prices.

 

After Record August, Can Russia Pump More Oil In 2009?

Official opinion conflicts with analysts' views over whether production from Russia's new oil fields can replace the fall from older deposits after record August output.

 

Russia May Face Oil And Gas Output Slump Amid Exploration Cuts

Russia could soon face a slump in oil and gas production following a five-fold reduction in geological prospecting, a senior senator said on Tuesday.

 

Gazprom's Growing Global Gas Interests

Russia's state-run Gazprom, the world's biggest gas producer, has been expanding internationally in a drive to become a dominant global energy market player.

 

Gazprom Kicks Off Gas Sales in U.S.

Gazprom Marketing & Trading USA Inc., a company in the Gazprom group, has announced the start of natural gas sales in the U.S., the Russian gas giant said in a press release.

 

Indicators

 

False Economic Hopes

Rosstat does not provide enough comprehensive statistical data for analysts to draw conclusions about economic recovery.

 

Infrastructure

 

Russia Risks Prolonged Slump As Asset Quality Worsens

Russian government and central bank assurances that the nation’s financial industry is on the brink of recovery may be premature as asset quality continues to deteriorate, industry executives said.

 

Insurance

 

One In Two Russians Does Not Use Insurance Services – Poll

One in two Russians does not use the insurance services at all, and in most cases the experience of contracting insurance companies is confined to buying the driver's mandatory civil responsibility insurance policy.

 

Investment

 

Foreign Investment In Russia $17 Bln In First Half Of 2009 – Putin

Russia's prime minister on Friday welcomed the $17 billion in direct foreign investment that came into Russia in the first half of 2009, and vowed that the country would continue to attract investors.

 

Russia's 'Explosive' Earnings May Spur Stock Surge

Russian stocks are poised to surge, extending an 88 percent rally this year, as the economy’s recovery spurs profits, analysts at UBS AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. said in reports today.

 

Moscow Plans To Privatise Public Assets

Russia is planning a wave of privatisation that could see stakes sold in ports, airports, shipping companies and Rosneft, the oil company, to raise revenue in the second half of 2010, according to Igor Shuvalov, first deputy prime minister.

 

The Peril And Promise Of Investing In Russia

It's still risky, but for global corporations, the country is simply too big—and too rich—to ignore.

 

Fund Flows: Turning Positive for Russia

The weekly fund flow report from EPFR Global shows improving flows into Russia funds and, although one snow flake doesn’t make a winter, it adds to the build up of optimism that investors are looking more favorably at Russia risk.

 

IT

 

Internet Day Marked With Outreach, Censorship

Over the decades that have elapsed since its advent, the Internet has turned into an inalienable asset of life for many Russians. Like in all other parts of the planet, the worldwide web has transformed into a mass information medium, a place where people do business, familiarize themselves with culture, or simply maintain interpersonal communications.

 

Russian Speaker Calls For 'Very Responsible, Very Selective' Internet Censorship

The speaker of the Federation Council, Sergey Mironov, has called for the setting up of a national consultative body which would involve leading Internet users and bloggers.

 

Labor

 

Russian President Downplays Consequences Of Crisis, Says Job Vacancies Rising

Russian President Dmitri Medvedev has called for the consequences of the crisis not to be dramatized and for the economy to be restored calmly.

 

No Room To Move

Mounting job losses have some officials trying to encourage more Russians to move from monogorods, or single-industry town, to places lush with vacancies - but sociologists and union leaders say that the very fabric of Russian life keeps workers grounded.

 

Retail

 

Ikea Tries To Build Public Case Against Russian Corruption

Stanislav S. Voskresenskiy, a Russian deputy minister of economic development, said in an interview that he had already been investigating Ikea’s troubles on the ministry’s initiative. The case, he said, is reflecting poorly on Russia’s image among foreign investors.

 

Fighting The Crisis With Retail Therapy

The global recession has hit Russia's consumers hard, as in much of the rest of the world. However, unlike most of the rest of the planet, Russia's consumers have their own way of dealing with it - retail therapy.

 

State Corps

 

Russian Privatization

Privatisation has a dark history in Russia. During the chaotic 1990s asset sales, the Russian word was popularly corrupted to prikhvatizatsiya, or “grabbing”. So it is interesting to hear Igor Shuvalov, first deputy prime minister, talking of a new wave of privatisations, perhaps including another chunk of Rosneft, the oil company.

 

Russia Could Sell Stakes In State Companies Next Year – Kudrin

The Russian government could sell its stakes in some companies next year to replenish the budget and will offer large share packages of state corporations in the long term, the finance minister said Tuesday.