Economic News in Review
Februrary, 2009
The following resource is meant to quickly introduce the reader to some of Russia's major business news for the month. Please note that some well-covered issues, such as Russia's oil and gas industry and general economic stats have not been reported here. This news review is part of SRAS's monthly newsletter.
Food and Agriculture
Auchan Under Investigation:
French retail giant Auchan has come under fire from Russia's general prosecutor and environmental watchdog, which said on Thursday the firm was in "gross violation of the law".
Georgia to Sell Rights to Make Borjomi Water
Georgia said Tuesday that it would sell the rights to produce its distinctive Borjomi mineral water, drunk around Russian dinner tables for decades until Moscow banned it in 2006.
Chechen President Restricts Vodka Sales
The leader of Russia's Chechnya region, Ramzan Kadyrov, on Tuesday restricted sales of vodka and other strong drink to two hours a day.
Brazil Considers 1 Million Tons of Grain
Bunge bought 25,000 tonnes of Russian hard wheat for delivery to Brazil's northeast in May, trade sources said on Monday, as Brazilian mills prepare to find alternatives to scarce Argentine wheat this year.
McDonald's to Invest $120 M in 2009
McDonald's, the world's largest fast food chain, intends to invest at least $120 million in opening about 40 restaurants in Russia in 2009, the company's president for Russia and Eastern Europe said on Thursday. Khamzat Khasbulatov said investment required for the construction of one restaurant was $3-4 million.
Carrefour Eyes Stake in Sedmoi Kontinent
"Carrefour is talking to Deutsche Bank about buying the entire stake of (Seventh Continent's main owner Alexander) Zanadvorov, which the bank has as collateral against a loan.
Pepsi's $100M chip plant
PepsiCo will build a second snack manufacturing plant in Russia to meet the growing demand in the country. The new plant will be based at Azov in the Rostov region
Russian Agriculture Faces Deep Crisis Of Overproduction – Expert
Russia's agro-industrial sector is living through a deep crisis of overproduction and can pull through it only if it increases its liquidity and the government offers an export-oriented policy, the president of the Russian Grain Union, Arkady Zlochevsky, said.
Development
Rental Trends for Residential Realty
The downturn in the real estate market and the recent jump in the value of the dollar and the euro have led many of the city's renters to demand discounts from their landlords, while others have started to look for cheaper accommodation.
Orthodox Church May Become One Of Largest Proprietors In Russia
The Economic Development Ministry has drafted a bill which gives every religion registered in Russia the right to own buildings, land and property, including that impounded by the Bolsheviks. If the bill is approved, the Russian Orthodox Church will be one of the largest proprietors in the country, and the authorities will never have to support religious buildings, which is important amid the financial turmoil.
Labor and Consumers
Unions in the Firing Line
Kozhnev's union activities have apparently led to him being fired - although officially the company says it was for leaving his shift early. He is not the only union activist facing a tough time during the crisis. At factories across the country, activists such as Kozhnev who stand up for workers' rights are being targeted as companies put the squeeze on wages and other conditions in harsh anti-crisis measures
The Revolution Won't Start Here
As the economic crisis takes its toll on most of Russia's industries, the lives of many people who live and work in small towns that support these industries are taking a turn for the worse.
Rising Prices, Falling Incomes
Customers in Moscow supermarkets tell how higher prices and the economic crisis are affecting their shopping habits
Chief Of Russia President's Office Plans To Cut Outlays And Personnel
Head of the Kremlin office Sergei Naryshkin instructed to submit proposals by March 2 on cutting expenses and number of staff members of the presidential office, said on Tuesday presidential press secretary Natalya Timakova.
Crisis Forcing Russians To Spend Savings
In 2008, Russians' expenditures exceeded their earnings for the first time – by 4.1 billion rubles.
Public Attitudes Toward Crisis, Unemployment, Examined
Eight Moscow residents who lost their jobs took part in a focus-group discussion.
Poll: 60% Support Protests, 23% Ready To Join Street Protests
The population sympathizes with protesters and sneers at actions supposedly showing support of the government's anti-crisis efforts
Despite Crisis, Women Keep Dreaming Of Flowers, Men Giving Gifts
The economic crisis has in no way upset women's dreams of getting bunches of flowers and no financial constraints will prevent men from catering to ladies' whims.
Promoters Of The Soviet Power Number 44% Results Of Opinion Polls Indicate
More than 50% Russians are convinced that Russia is on a wrong track nowadays. And which track is correct? The impression is that a return to the Soviet past is the best society can come up with.
Number of jobless grows
The number of officially unemployed Russians stood at 1.735 million as of February 3, a 90,000 increase in the space of seven days, the Health and Social Development Ministry said on Tuesday.
Government, Banking, Economic Indicators
Capping Workers Pay:
Kudrin said the Finance Ministry was preparing proposals to limit remuneration for managers of banks receiving state aid. The details of those proposals have yet to emerge.
The Kremlin Has Released A List Of Russia's Top Hundred Managers
A number of appointments have been made already, but the big rotations in the federal government are expected in March.
Bank official denies debt rescheduling was requested
A Russian official on Tuesday denied reports that Russian banks and companies were seeking a $400 billion loan rescheduling which had weighed heavily on the euro in Asian trade.
State See Economy Shrinking by 2.2%
Russia's economic outlook darkened on Tuesday, with a government forecast for a 2.2 percent contraction adding to a batch of gloomy data releases to put pressure on the ruble and stocks.
Russia's Capital Investment Down
Russia's capital investment fell 15.5 percent in year-on-year terms in January, Russia's Industry and Trade Ministry said on Wednesday
Ulyukayev Says Extra $92 Bln to Be Printed
Russia's central bank said it will print around an extra 3.2 trillion rubles ($92.03 billion) to cover this year's budget deficit without causing further declines in the country's forex reserves.
Putin Backs Free Capital Movement
Russian Prime Minister Vladimir Putin said on Friday he was against the idea of restoring capital controls following calls from a number of officials to do so to support the national currency.
Moscow Mayor Luzhkov Shares His Prescription For Handling The Crisis
Moscow Mayor Yuri Luzhkov explains that in his view, the main reason for the crisis in Russia is the state's economic policy: monetarism.
Is It Time For Prime Minister Putin To Answer For Results Of Anti-Crisis Efforts?
Kommersant-VLAST asked its readers if they thought it was time for President Dmitry Medvedev to fire Prime Minister Vladimir Putin.
Reliance On Raw Materials
Failure to diversify economy dooms Russia to be an exporter of oil and gas and preciously little else. Convinced that Russian economy will remain raw-material oriented, experts appeal to the government to abet its marketability.
S&P Sees Russia's GDP Falling In 2009 For 1st Time Since 1998-99
Russia's economy is expected to contract in real terms in 2009 for the first time since the 1998-1999 crisis, U.S. ratings agency Standard & Poor's (S&P) said in a press release, citing its new report on the Russian economy.
Putin Says Russian Govt To Increase Social Spending In 2009
Russian Prime Minister Vladimir Putin said Thursday that the government would increase social spending this year, ITAR-TASS reported.
Crisis May Hit CIS Harder Than Other Countries - Analyst
The effects of the on-going crisis may prove far worse for most of the CIS countries, that for other, more advanced economies, and their recovery period, much longer, the chief of the CIS economic cooperation department at the Economic Development Ministry, Sergei Chernyshev, told a forum of CIS business leaders on Friday.
President Meets With Members Of The First 100 In The High-Potential Management Personnel Reserve
Mr Medvedev said the high-potential management personnel reserve's formation is an undertaking for the entire country, because, in his view, the process of personnel renewal and getting the right people into the right jobs has been taking place very slowly in Russia.
Transcript Of Surkov Speech To Strategy 2020 Forum
Transcript" of speech by Vladislav Surkov, first deputy chairman of the Russian Presidential Staff, to March 2, 2009, Moscow "Strategy 2020" forum marking first anniversary of President Dmitriy Medvedev's election.
Russian President Says Electoral Law May Need Changes in Light of Regional Polls
President asks Central Electoral Commission to file complaints in writing.
Finance officials pursued over graft
A top Russian investigator on Thursday said current and former deputy finance ministers were guilty of "large-scale theft," in the latest blow to Finance Minister Alexei Kudrin's staff.
Putin criticizes foreign agencies' downgrades
Prime Minister Vladimir Putin on Monday challenged Western ratings agencies that have downgraded Russia's debt, calling for the creation of Russian ratings firms that he said better understood its economy.
Technology, Telecommunicaitons
Ivanov Concerned Over Uncontrolled Drain Of Scientific Developments From RF
A lack of proper control over the use of scientific and research works not only results in a federal budget revenue shortfall but also leads to unauthorised exchanges of technologies with other countries and a loss of Russian industry's priority in high-tech sectors, Vice Prime Minister Sergei Ivanov said.
Antitrust Body Blocks Disney TV
Russia's anti-monopoly agency on Friday blocked Walt Disney Co's <DIS.N> local television venture, derailing the media giant's plan to create a free, Disney-branded channel to expand in the high-growth market
Pulkovo Park A Risky Project
Technopolis Oyi of Finland said its 150 million-euro ($189 million) St. Petersburg project poses the "biggest risk" to the real estate company in 2010 as the Russian economy faces the worst slump in a decade
Medvedev Criticises State Of Affairs In Developing Info Society
Russian President Dmitry Medvedev is dissatisfied with the rate of development of information society in Russia.
Russia Becomes The World Leader For Spam And "Innovative" Malicious Software
According to Kaspersky Lab's annual report on the development of computer threats in 2008, Russia has surpassed all other countries in its spam generation and in the sophistication of its malicious software.
Russia's Top Two Social Networking Sites Battle It Out To Be No 1
In January 2009, the pages of the social networking site V kontakte (Russia's version of Facebook, vkontakte.ru) were visited at least once by 13,090,000 unique users from Russia - 11,000 more than Odnoklassniki (Russian version of Classmates or Friends Reunited, odnoklassniki.ru) attracted over the same period.
No ejecting the pirates
About a decade ago, the vast majority of pirated videos available in Russia were made by illegally filming in movie theaters. And although Russia's DVD and CD market has noticeably evolved since those times, pirate DVDs and CDs still account for the lion's share of movies and music sold here, while Internet piracy is on the rise as more people get connected to the Web.
Automotive
Volvo Sees Lower Sales Growth
Sweden's Volvo Trucks expects disappointing sales growth of 25 percent on the Russian market to 15,000 vehicles in the next few years.
Car Sales Plummet 33% in January as Credit Dries Up
Sales of new cars in Russia plunged 33 percent in January, a leading business group said on Thursday, and predicted sales will tumble by 40 percent this year as Russia enters recession and cheap car loans dry up.
Most Russians Have No Cars, Cannot Afford To Buy Any - Poll
Despite the motor boom in Russia over the past few years most people still have no private cars or the intention to buy any - just because they cannot afford them, an opinion poll by the national public opinion studies center VCIOM has found.
Tourism, Travel
Russia Starting To Experience Downturn
Moscow has experienced a five-point drop in chain hotel Occupancy Rate (OR) for 2008, reaching 70%. Average Daily Rate (ADR) ended the year at €251, only a 5% increase compared to 2007, whilst Revenue per Available Room (RevPAR) decreased slightly to €175.
Russian Railways May Post Loss in '09
Russian Railways, the country's rail monopoly, may post a loss this year as the global recession cuts industrial production and demand for freight traffic
State Will Subsidize Far East Air Tickets
The government will cover half of the cost for economy-class plane tickets for young people and pensioners flying between the Far East and Moscow, St. Petersburg and Sochi, President Dmitry Medvedev said Thursday.
Boozing Pilots and Bad PR
Allegations last week that an Aeroflot pilot had attempted to fly a flight to New York while blind drunk proved good fun for the Western media, but showed how badly some Russian companies handle their PR.
Superrich Still Want to Fly to Space
The economic downturn has not dampened rich people's enthusiasm for space tourism, the world's first commercial space flight company says.
Oil and Gas
FAS investigates oil firms
Russia's anti-monopoly watchdog (FAS) said on Tuesday it had started investigations into four major oil firms -- Rosneft, LUKOIL, Gazpromneft and TNK-BP over high prices.
Naftogaz Says It May Pay Late for Gas
Ukraine now pays for Russian gas monthly, a week after the month's supply. Under a new 10-year agreement signed with Gazprom last month, however, if Ukraine is late on a payment, the settlement switches to prepayment.
State Will Back New Paper Mills
Russia's President Dmitry Medvedev said that his government would support the creation of pulp and paper mills close to the country's borders to export more value-added products.
Gazprom Eyeing Deal in Nigeria
France's Total and Russian gas monopoly Gazprom are interested in participating in a multi-billion dollar project to pipe Nigerian gas to Europe across the Sahara.
Exxon Prepares to Drill at Sakhalin-1
ExxonMobil is preparing to drill new exploration wells at its USD 17 billion Sakhalin-1 project in Russia, even as a dispute with the government over budgets and work plans lingers.
Sibir's CEO Suspended on Real Estate Probe
Russian Sibir Energy has suspended chief executive Henry Cameron from his duties and opened a probe into its real estate deals with its co-owner, Shalva Chigirinsky,
LUKoil to Cut Overseas Investment
The overseas division of Russia's second-largest oil firm LUKOIL (LKOH.MM) will cut investments by a fifth this year but plans to up production by 7 percent.
TNK-BP to Sell in Rubles
P Plc's Russian unit TNK-BP will start selling crude oil in rubles as Prime Minister Vladimir Putin seeks greater control over prices for the country's biggest export earner.
Poll: Most Ukrainians Satisfied With Gas Accords With Russia
Most Ukrainian citizens are either satisfied with the terms of the gas agreements between Kyiv and Moscow or believe they are acceptable, according to a poll carried out by the Kyiv International Institute of Sociology on January 29 through February 5, 2009.
Metals
Mechel Said to Bid for US Firm
Mechel reduced the purchase price of West Virginia-based Bluestone Coal Corp. to $425 million plus 80 million preferred shares in Mechel
2,000 Eyraz Jobs May Be Cut
Russian steel maker Evraz Group could lay off nearly 2,000 workers by April at its steel and iron ore plants in the Ural mountains city of Nizhny Tagil.
EDF Interested in Russian Uranium
Electricite de France, the world's biggest nuclear-power producer is interested in mining uranium in Russia.
Medvedev Lays Metals Merger to Rest
Russia's metals billionaires have shelved plans to create a national mining giant around Norilsk Nickel after the Kremlin opposed plans to absorb their billion-dollar debts in exchange for a stake in such a firm.
Polymetal: Precious Metal Panic is Over
Russian gold and silver miner Polymetal will use its spare cash to buy production assets in the former Soviet Union, rather than build a large reserve base, the company's chief executive said on Thursday.
Metals merger is a bailout in disguise
A possible merger between Russia's largest metals and mining firms looks far from realistic after both Prime Minister Vladimir Putin and the Federal Anti-Monopoly Service criticised such deals as a back-door way of debt restructuring.
Advertising, Style, and PR
Teen designer Kira Plastinina's U.S. store chain files for bankruptcy
A rough economy and belt-tightening shoppers force the Moscow teen queen's chain to file for Chapter 7 seven months after its debut. The chain had plans to open 250 stores in the U.S.
Moscow: Valenki Boots
These days, valenki are making a stylish comeback in Russia's capital, with Moscow's young and fashionable wearing them out in the city's cafes and nightclubs.
Russia's PR Warriors Resort To Throwing Lard
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