trends of the russian federation economic development
DESCRIPTION
Vladimir N. Kniaginin, Director, Foundation Center for Strategic Research «North-West» Economic Policy Dialogue among think tanks of emerging economiesTRANSCRIPT
Trends of the Russian Federation Economic Development Vladimir N. Kniaginin, Director, Foundation Center for Strategic Research «North-West» Economic Policy Dialogue among think tanks of emerging economies November, 2013
Source: Ministry of economic development of the Russian Federation
Russia faces deterioration of the economic situation: while the pace of current economic growth is reducing further instability is likely to occur
5,5
7,6 7,4 7,6 8,3 8,3
5,7
-‐7,6
4,6
5,4
3,4 3,0
3,6 3,9 4,0 3,8 3,8
3,4 3,1
2,8
2,6
5,5
7,6 7,4 7,6 8,3 8,3
5,7
4,6
5,4
3,4 3,6 4,3 4,5
4,8 4,4 4,3 4,2 4,1
3,8
3,6
5,5
7,6 7,4 7,6 8,3 8,3
5,7
4,6
5,4
3,4 3,6
5,4
6,3
7,3 7,3 7,4
6,1 6,0
4,9
3,9
-‐8,0
-‐6,0
-‐4,0
-‐2,0
0,0
2,0
4,0
6,0
8,0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030
Innovative scenario Realistic scenario Pessimistic scenario
%
4%-ghetto level
2
Source: Ministry of Finance of the Russian Federation
Russian regions also deal with the deterioration of economic situation: their inability to fulfill the obligations leads to the increase of regional debt burden
The level of debt load is high or critical in 23 regions of Russia
Krasnoyarsk Territory
Kemerovo Region
Republic of Tatarstan
Samara RegionSaratov Region
Volgograd Region
Nizhny Novgorod Region
Vologda Region
Moscow Region
Belgorod Region
Krasnodar Territory
Over billion rubles 28 120,00
Republic of Sakha (Yakutia)
Omsk Region
Sverdlovsk Region
Orenburg Region
Udmurtian RepublicRepublic of Mordovia
Ryazan Region
Kaluga RegionYaroslavl Region
Tver Region
Arkhangelsk RegionLeningrad Region
From to billion rubles 18 373,00 25 403,00
Regions with most crucial debt level:
3
Source: Russian Federal State Statistics Service, Federal Customs Service of Russia, Ministry of economic development of the Russian Federation
Risks of the economic reduction in Russia are caused by the uncertainty of commodity markets’ development
34%
15% 13%
38%
2008
нефть
газ
металлы
прочее
36%
12% 8%
44%
2012
нефть
газ
металлы
прочее
24%
16%
22%
38%
2000
нефть
газ
металлы
прочее
Dynamics and structure of export of the Russian Federa6on
60,9 69,6
93,9
60,8
78,2
109,6 110,8
104 113
127
151
0
20
40
60
80
100
120
140
160
Urals Oil Price Forecast , US$ per barrel
31517
27404
31794
35297
38118
25000
27000
29000
31000
33000
35000
37000
39000
2010 2011-2015 2016-2020 2021-2025 2026-2030
Non-Ferrous Metals Prices Forecasts*, US$ / t
478
395 376
425 471
0
100
200
300
400
500
600
2010
Ferrous Metals Prices Forecasts, US$ / t
area of fiscal instability
Oil Gas Metals Others
Oil Gas Metals Others
Oil Gas Metals Others
2011-2015 2016-2020 2021-2025 2026-2030
4
Source: Ministry of economic development of the Russian Federation
Deterioration of the partner countries’ economic situation is also a source of the crisis phenomena
0,4
-4,5
2 1,7
-0,4
-5
-4
-3
-2
-1
0
1
2
3
2008 2009 2010 2011 2012
The stagnation of the Eurozone economy is one of the basic reasons of the Russian economic growth
reduction
GDP growth in the EU (28 countries), % per year
5
Source: Russian Federal Treasury, Russian Federal State StaDsDcs Service
After facing the problem of the global economic recession Russia began to deal with risks within its own economy. One of such threats is a slowdown of the consumer market growth.
5498,5 6739,5
8554,9
10633,9
13593,4
17290,1 18637,5
20952,2
23369,2
26628,9
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Wage growth has exhausted its sources. Despite the positive retrospective further wage growth rate might be significantly
reduced.
This leads to serious risks of failure to perform most consumer obligations. Among
the main problems is a high level of loan commitments taken by population in the period of favorable economic conditions.
27 841 523
42 456 010 45 284 113 44 382 795
54 951 980
77 667 162
66 328 347
2007 2008 2009 2010 2011 2012 2013
2013, result for 8 months
Volume of consumer crediting to individuals saw a twice-level growth in the last 5 years
billion rubles
6
Source: Central Bank of the Russian Federation
In these circumstances the Government acts as a crises damper and a main driver of economic recovery
Financial reserved funds are used to ensure more stability
33
14 12 11
33
54
32
22
0
10
20
30
40
50
60
2013 2014 2015 2016
Current operation account
75 dollars per barrel 125 dollars per barrel
20
31
22
4
20
-‐45 -‐43 -‐43
2013 2014 2015 2016
Changes in Foreign Exchange Reserves
75 dollars per barrel 125 dollars per barrel
But in the long run it creates new risks
billion rubles billion rubles
7
Source: Ministry of Finance of the Russian Federation
The Government began to optimize its costs but until now this process has been accompanied by an increase of social expenses
Plans to save funds of the Federal budget (according to proposals of the Russian
Federation Ministry of Finance to reduce public spending)
The growth of social obligations creates a threat to the Russian budget
2008
2012
Share of expenditures to healthcare, education and social benefits in the total RF Federal
budget
194,5
377,1
581,9
2014 2015 2016
million rubles
8
Source: Russian economic school and Ernst&Young
Overall import growth is likely to be among new threats for Russian economic recovery after our entering the WTO. This will have particular impact on sectors with low level of competitiveness.
Consequences of Russia's entering the WTO for the Leningrad region and St. Petersburg industries (from 2011 till the end of the transition period in the industry)
Industry Change in produc6on volume, %
Change in skilled labour force wages , %
Change in unskilled labour force wages, %
Food industry -‐1,33 -‐0,95 -‐0,43
Light industry -‐4,67 -‐4,77 -‐4,27
Wood processing, pulp and paper produc6on, produc6on of wooden goods
-‐5,21 -‐5,05 -‐4,56
Oil goods produc6on -‐2,3 -‐1,73 -‐1,21
Chemical and petrochemical produc6on 1,13 1,48 2,02
Ferrous metallurgy 33,48 36,07 34,77
Nonferrous metallurgy 35,81 36,44 37,16
Mechanical engineering -‐2,4 -‐2,32 -‐1,81
Produc6on of building materials -‐2,54 -‐2,28 -‐1,77 Other industries -‐1,35 -‐1,45 -‐0,94
Electricity genera6on 0,25 0,67 1,20
9
Source: Ministry of regional development of the Russian Federation
Other new threats include an increased role of factors not related to the global economic environment
Expenses for holding the Olympics in SOCHI-2014
Flood 2013 in Khabarovsk territory
65%
10%
18%
7%
Investors
Olympstroy
Federal ExecuDve AuthoriDes
AdministraDon of the Krasnodar region and Sochi
Total expenditure
1,5 trillion rubles
37%
11% 20%
32%
Housing RehabilitaDon
VicDm Assistance
Agricultural losses
Others
General damage 40 billion
rubles
Flood 2013 in the Khabarovsk region
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Creation of Smart State
Decline of global demand World competition growth RF workforce reduction
What affects development of the Russian Federation
Goal of the Russian Federation Development
Government Business Individuals
Who ensures the goal achievement
What hinders the goal achievement
1. Inefficiency of state structures 2. Low quality of public administration
1. Dependence on the budget money 2. Slow rate of implementation of innovations 3. Low labor productivity
1. Gap between existing competencies and market requirements 2. Low entrepreneurial activity
Source: D. Medvedev, «The time of simple solutions passed off» // Vedomosti, 27.09.2013
The Russian Government needs to respond on increased complexity of all state development processes. It leads to changing economic policy.
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Source: Ministry of development of the Far East, Administration of Primorsky Krai
Russia tries to extend its cooperation with emerging APEC economies
RF Ministry of the Far East development has been created and new management bodies have
been formed
New infrastructure is being created: Special Economic Zones (SEZ), ports, transport
corridors
Ac#ve policies on the global market of direct investments
AGENCY FOR INVESTMENT AND EXPORT SUPPORT
Countries of the Asia-‐Pacific Region (APR countries)
Crea#on of export territory of priority development, industrial and
technology parks
CORPORATION OF RUSSIAN EAST DEVELOPMENT
The coastal towns of far East Federal district (FEFD)
Interna#onal Public Private Partnership in infrastructure projects
FOUNDATION OF THE FAR EAST AND BAIKAL REGION
DEVELOPMENT
APR countries and the ci#es of FEFD
Policy for aIrac#on of residents and staffing of investment projects
AGENCY OF HUMAN CAPITAL DEVELOPMENT
Ci#es in Russia and Ukraine
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Harbin
Changchun
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