Economic News in Review
November, 2008
The following resource is meant to quickly introduce the reader to some of Russia's major economic sectors, indicators, and consumer spending.
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.
Airlines
Big Airlines Get State Credits
According to unofficial information, no more than five airlines will receive credits, three of which were announced yesterday by First Deputy Prime Minister Igor Shuvalov. They are Aeroflot, Transaero and Russian Airlines (founded by Rostekhnologia).
Media and Advertising
Ad Spending Down In Russia
The advertizing costs in Russia have lowered in all branches of economy, but the crisis won't notably affect the growth of Internet advertising.
RBC TV Won Hot Bird TV Award
RBC TV has been acknowledged the best news channel in Europe and received Europe's single TV award, the Hot Bird TV Award, aimed at promoting top-quality and original TV product.
Technology & Communications
Web Registration in .ĐÔ Zone to Begin in July
Russia will become the first nation with the non-Latin domain. The registration of web-sites in Russia will begin in early July and roughly 350,000 sites will probably emerge in two years.
Govt-Controlled Rosnano to Inject 240bn in Nano-Industry
Government-controlled Rosnano will inject over 240 billion ruble in nano-industry in the nearest eight years, Rosnano General Director Anatoly Chubais announced during the International Nanotechnology Forum in Moscow.
Russia's Supreme Arbitration Court Defended Fair Domain
Presidium of the RF Supreme Arbitration Court has established an important precedent in the battle against unfair registrars of domain names. The court delivered the judgment under the rules of the World Intellectual Property Organization (WIPO) and upheld Denso Corporation of Japan.
MTS Slashed Capital Spending Outlook
Russia's cellular giant MobileTeleSystems, or MTS, has lowered the 2008 capital spending outlook to $2 billion from $2.5 billion, Interfax-Telecom reported Thursday.
Russia's High-Tech Sector Reels
A glimpse of how the financial crisis has swept through Russia's budding entrepreneurial culture and crashed like cold water onto young workers who had come to see the boom times as normal.
Agribusiness and Lumber
Finns Keep Lumber Duty Level
The next raise in the export duty on Russian lumber to Finland has been postponed at least until the autumn of 2009, Russian Prime Minister Vladimir Putin announced Tuesday after a meeting with Finnish Prime Minister Matti Vanhanen. Only large lumber producers will suffer from the move.
Grain Prices to Rise
Even in an economic crisis, demand for foodstuffs remains steady. With cultivated land shrinking and consumption rising in developing countries, the price of grain is expected to rise on overseas futures markets.
Rosselkhoznadzor Halves the Fish
The restrictions that Rosselkhoznadzor plans to impose on fish supplies from the EU, Japan, China and Vietnam may slash the imports by 50 percent starting from January 1, 2009.
Import Wine Piled Up at Customs Warehouses
The global financial turmoil has broken up preparation for New Year festivities. Thousands of unpaid bottles are still at the customs terminals, while the supplies shed 2.5 fold to 3 fold on year in October and November. But the analysts foresee no shortage, as the demand for alcohol is going down as well.
Russia Intends to Trim Poultry, Pork Import Quota
The RF Agriculture Ministry has suggested reducing the poultry import quota by 300,000 tons and slashing the pork quota by 200,000 tons in 2009. The response of Prime Minister Vladimir Putin was not to delay the decision that should be passed by December 1, 2008.
The Drunkenness Tax
State Duma member Viktor Zvagelsky has suggested imposing fiscal responsibility on the alcohol producers for impairing nation's health. The actual proposal is that distilleries should transfer for the medical assistance 2 rubles from each 0.5-litter bottle of vodka.
Russia To Adopt Food Security Concept
Russia will adopt the Food Security Concept till this year-end, PRIME-TASS reported with reference to Agriculture Minister Alexei Gordeev.
President Announces Good Harvest
This year's harvest in Russia will meet public needs fully and increase the country's exports potential, Russian president Dmitry Medvedev stated today. "This year's grain harvest is more than 100 million tons, a high for the last 15 years," the president said.
Harvester Operators To Be Fed from Budget
Russia's President Dmitry Medvedev has made public the subvention procedures for grain exporters. The rate should be at least $40 per a ton and the subsidized export is to amount to 10 million tons, which is half of all export of 2008 and 2009.
Automotive
Govt. Gives Support to Auto Industry
The government will support the domestic automobile industry, Russian President Dmitry Medvedev stated today in a meeting with regional journalists, Vesti television reports. Medvedev noted that the support for the auto industry is part of a package of support measures. Among them also is the subsidization of interest on loans.
Ford, Hyundai to Hike Prices in Russia
Following Toyota carmaker, Ford hikes the prices by 5 percent in Russia starting from January 1. The surge is attributed to the ruble depreciation and to impending increase in import duties. Russia's second in terms of sales, Hyundai will be the next.
Nissan Sales Soar in Russia
Sales of Japanese Nissan automobiles in Russia rose 29.7 percent between January and November 2008, in comparison with the same period of 2007.
Volkswagen Slashes Russia's Production Target
Right after Renault, Volkswagen has announced the planned reduction in output of its Russia's plant. The assembly at Kaluga facility will be 13 percent below the earlier plans. The analysts forecast that selling even those 100,000 cars won't be easy in the crisis environment.
Peugeot Plans Sales Spike in Russia
French carmaker Peugeot plans to increase sales in Russia in 2009 by 20-25 percent over this year. Peugeot intends to sell about 60,000 cars on the Russian market. It also intends to add 30 more dealerships in Russia.
The Right Steering Wheel
The drivers rallied in Russia past weekend to oppose potential increase in customs duties on used foreign cars and their spares. The largest action was staged in Vladivostok and halted nearly all traffic in the city. The arrangers say that, in Vladivostok alone, 15,000 from small business will lose their jobs.
Daimler to Save on KamAZ
German Daimler was the first foreign automaker to materially reduce investments in Russia's projects. It abandoned the plans to buy out 42 percent in KamAZ truck maker for $2 billion. Instead, Daimler is willing to purchase no more than 10 percent in KamAZ and the budget of the undertaking will be much lower than initially expected.
Foreign Car Owners To Have Higher Self-Rating
The automobile industry has become the first industry in Russia to be rescued under the bailout plan for the country's economy. The government's commission hiked duties on new foreign car import from 25 percent to 30 percent and shortened from seven to five years in-service time of used cars to be subjected to blocking-off duties.
Foreign Cars Moved Backward
For the first time in Russia, the sales of foreign cars suffered the monthly decline of 5.7 percent to 169,115 in October.
Traffic Accidents Cost 2.5 Percent Of GDP To Russia
Russia annually loses 2.5 percent of GDP on traffic accidents, Interfax reported with reference to Viktor Kiryanov, who heads the traffic safety department at the RF Interior Ministry.
Metals and Mining
Norilsk Nickel Not to Slash Copper, Nickel Output
Russia's metals giant GMK Norilsk Nickel will slash expenses by 10 percent next year, including through staff reduction. The company will lower funding of investment projects by 24 percent in Russia and by nearly two fold overseas.
Aluminum Loses Efficiency
World prices for aluminum shed by over 30 percent from early September, having sunk to below $2,000 per a ton past week. Higher efficiency keeps RUSAL afloat, but the analysts predict a decline in production.
Norilsk Nickel Granted Administrative Resource
Vladimir Potanin and Oleg Deripaska have sorted out the conflict of holders at GMK Norilsk Nickel. The parties finally agreed on the parity management of GMK - Deripaska will put forward his executive director in addition to Vladimir Strzhalkovsky, the general director nominated by Potanin.
Two Big Platinum Deposits Discovered In Russia
Big platinoid deposits were discovered in Russia first time from the time of the Soviet Union. Aggregate size probably reaches 250 tons.
Polus Authorized to Control KazakhGold
Kazakhstan's authorities have sanctioned Russia's gold miner Polus Zoloto to buy out a controlling interest in KazakhGold, a source close to the deal told Interfax-Kazakhstan.
Metalloinvest Paid 4.5bn for Udokan
Metalloinvest holding has paid 4.5 billion ruble as the first installment due for the Udokan license.
Government and Int'l Trade
See "Russian Politics in Review," and "Russian Foreign Policy in Review" also on this site.
Currency, Inflation, Gov't Spending
The Risks Of A Devalued Ruble
As oil prices have dropped below key fiscal support levels over the last few months, the outlook for the ruble has become a national concern.
Russia Leads in Inflation Amid 11 Biggest Economies
Of 11 biggest economies of the world, Russia posted the highest inflation in September, PRIME-TASS reported.
Russian Int'l Reserves Up $5 Billion
The volume of Russian international reserves on November 28 was $454.9 billion, the Russian Central Bank reports. The reserves were at $449.9 on November 21.
Foreign Money Flow Not So Heavy Now
No more than $75.792 billion flew to Russia in January through September of 2008, which was 13.8 percent less than a year earlier.
Economy Loses the Money Weight
The broad money supply narrowed by 5.94 percent in October of 2008, the Central Bank of Russia announced yesterday. The economic analysts attribute the reduction to large-scale transition of Russia's economy from rubles to foreign exchange, expecting the monetary compression to affect the inflation in the second half of 2009.
Ruble Devaluation Looms On Oil; Troika Sees 30% Drop
Russia's currency reserves, the third-biggest in the world, are no match for tumbling oil prices and an exodus of capital that may force the central bank to accept a devalued ruble.
Central Bank Let The Ruble Slump To Dollar, Euro
Central Bank of Russia has set the November 12 official rate of exchange at 27.34 ruble per a dollar, allowing the ruble to depreciate by 0.376 ruble. The euro worth increased by 0.2387 ruble to 34.8 ruble. The worth of bi-currency basket ($0.55 and €0.45) gained 0.31 ruble to 30.7 ruble. The bi-currency basket hasn't cost so much this year.
Demand High For Foreign Currency
Russians bought $6 billion worth of foreign currency in banks and exchange points in September. That is the highest sum since 1999.
Putin Advised to Russians to Keep Money in Rubles
For the people living in Russia, the ruble is the preferable currency for savings, Prime Minister Vladimir Putin said.
Minister: Vast Reserves Protect Russian Economy
Russia's finance minister sought Wednesday to reassure investors and citizens that the economy will survive the global financial turmoil, saying Russia's rainy day fund will last for at least 7 years under the worst-case scenario.
Russia Suffers Plunging Reserves
As Ruble Struggles Russia's foreign-exchange reserves are draining fast and may take almost a decade of economic stability with them.
CIS May Pay Oil, Gas Bill in Rubles
Heads of national banks and finance ministers from the CIS countries will discuss the use of the ruble to settle accounts with Russia for energy deliveries. Currently, payments are made in dollars, which are then converted into rubles in Russia. The extra expense of converting currency is reflected in the oil and gas prices, so the change would be beneficial to the importers.
CBR Reported About Reserves
Central Bank of Russia CEO Sergei Ignatyev reported to the State Duma yesterday the structure of Russia's foreign exchange assets as of November 1, 2008. As it turned out, the share of dollar assets and U.S. mortgage bonds narrowed materially, while the share of euro assets went up.
New Currency Policy Expensive
The Central Bank of Russia published the latest data on Russia's international reserves yesterday. Between November 7 and 14, the reserves shrank by $21.9 billion to $453.5 billion. This is the first time that the Central Bank reduced reserves not only in order to support the ruble, but to support banks.
Budgets
Medvedev Inked Budget for 2009 through 2011
Russia's President Dmitry Medvedev has inked the act on federal budget for 2009 and for the scheduled period of 2010 and 2011.
Moscow Slashes 2009 Budget
The spending portion of 2009 Moscow budget will narrow by 202 billion ruble, Yuri Korostelev, who heads the city's finance department, said during the sitting of the Moscow Duma's budget and finance commission.
World Bank Counts Russian Expenses
The total expenses of Russian authorities due to the global financial crisis has been 5.6 trillion rubles (more than $200 billion), the World Bank estimates in its latest report on Russia, according to RIA Novosti.
Russia Has Spent $222 Billion on Crisis
The world's major countries have already spent, or plan to spend, $9.2 trillion on anticrisis measures. Great Britain has spent the most – 37 percent of its GDP. Russia has spent $222 billion (13.9% of its GDP) so far.
Govt Plans to Spend 500bn from Reserve Fund in 2009
Russia's government plans to spend up to 500 billion ruble from Reserve Fund in 2009, Vice Premier, Finance Minister Alexei Kudrin announced, specifying that the actual amount might be even bigger. "We will make the final estimate after December 1, 2008," the vice premier said.
New Budget Depends on Nov. Stats
Russian Prime Minister Vladimir Putin will begin a series of meetings this week to determine budget policy for 2009 and 2010-2012. Anticrisis measures for the budget are expected to be ready by December 5 and draft budgets are due December 9.
Labor and Demographics
Russian Has Bright Future In Poll
The majority of its citizens (82%) expect Russia to join the ranks of the world's ten leading countries in the next 15-20 years. Thirty-seven percent of respondents say Russia should "regain the superpower status the USSR had," compared to 34 percent in 2003."
More Russians Now Prepared to Defend Their Interests via Collective Actions than a Decade Ago
More Russians are now prepared to take part in demonstrations, meetings, and hunger strikes, to rely on unions and to join political parties than they were a decade ago.
Kremlin Says To Defend Russian Middle Class In Crisis
Russia must move decisively to protect the emerging middle classes from poverty in the economic slowdown brought by the economic crisis, Kremlin first deputy chief of staff Vladislav Surkov said on Friday.
The Incredible Shrinking People
Russians are dying out, with dire consequences.
Muscovites Fear Layoffs
Forty percent of Muscovites are worried about layoffs connected with employers' difficulties because of the world crisis, according to PRP Group research. Office workers are more worried than those who do physical labor (49% vs. 34%). About 42 percent of Muscovites think the companies they work for will experience financial difficulties next year; 59 percent of Muscovites fear the crisis will hit their family budgets.
Russia's Govt to Appropriate 50bn to Confront Unemployment
Russia's government will appropriate from 10 billion rubles to 50 billion rubles to the labor agencies to oppose the problem of unemployment, Prime Minister Vladimir Putin pledged during his annual TV question-and-answer conversation with the nation that was held December 4.
A New Army of Unemployed
The unemployment rates accelerated by 8.7 percent, and the real income of the nation fell 0.5 percent on month in October of 2008. Russia's employers stand ready to dismiss more than 200,000 in the nearest future.
Economic Coverage by Media Isn't Objective, Half of the Nation Said
Russia's media cover economic situation in the country less adequately than the global economic situation, said the respondents polled by the social analysts from the Public Opinion Foundation.
Foreign Workers Mainly Unskilled
The increase in the quota on foreign workers in Russia in 2009 to almost 4 million people has been mainly due to a greater demand for unskilled foreign construction and industrial workers. Employers have filed fewer applications for all specialization except agriculture.
Russia Will Widen Gastarbeiters Quota If Needed
Russia may introduce additional quotas on labor migrants, Interfax reported with reference to Deputy Health and Social Development Minister Maxim Topilin.
Foreign Household Help to Be Licensed
A draft law is being prepared in the Federation Council to legalize foreign workers employed domestically. Russians who hire foreign household workers will be required to obtain a license for their employment, which will serve in place of a work permit.
Indicators
GDP Growth Slows in November
The advance GDP indicator published yesterday by VTB Europe Bank shows a sharp drop in the economic growth rate in Russia in the fourth quarter of the year. The bank calculates its GDP indicator from the purchasing managers' index using industry and the service sector. It corresponds to expectations of the growth rate of the GDP on the part of Russian big business. In November, the GDP indicator dropped to 2.1 percent, from 5 percent the previous month.
Import Prices Rise, Volume Falls
The Central Bank of Russia published official data on the import and export of goods in Russia between January and September of this year. The growth of import in monetary terms was the least in September at 27.4 billion, as compared to $27 billion in August, while export fell from $45.5 billion to $43.8 billion, as the beginning of falling oil prices was felt. The trade balance thus shrank to $16.4 billion.
Rosstat Tracks Crisis
The Russian federal statistics service yesterday published detailed data on socio-economic conditions in Russia in October as the financial crisis entered its critical phase. There was a sharp fall in production in ten of the 25 leading industrial regions of Russia, with metals, chemicals and heavy industry hardest hit. Geographically, the Urals and Northwest Russia were the centers of the crisis in industry and southern Russia was the center of the crisis in trade.
Cos. Cut Back on New Year's Fetes
Twenty percent of Russian companies have cancelled their New Year's celebrations due to the financial crisis. 58 percent of companies' holiday plans remain unchanged.
Falling Prices Of Manufacturers Broke Records In Russia
The manufacturers' prices shed 6.6 percent in Russia in October of 2008, RIA Novosti reported with reference to Russian statistics committee Rosstat.
Economy Worked for the Downturn
Given Rosstat's statistics, industry is sinking into recession to be followed either by the economy's slump or by the soft landing into lots of years of decline.
The Waning GDP
With the oil price of $50 a barrel, the GDP is officially estimated to gain roughly 3 percent in 2009.
Industrial Growth Down In October
The industrial production index stepped up by no more than 1.6 percent on year in October vs. the September advance of 6.3 percent and the August increase of 4.7 percent, Russia's federal statistics authority Rosstat reported Tuesday.
Banking and Credit
Russia's Medvedev Urges Banks To Act Responsively
President Dmitry Medvedev urged state-funded banks to "act responsibly" Tuesday, the latest comments by top Russian officials warning that banks might be abusing the government's billion-dollar bailout.
All Profits Lost
The banking business in Russia yields no profits now. Each third bank lost in October, while the aggregate losses neared 40 billion ruble. Russia's banking system had posted no negative result since 1999.
The Measure of a Bank Is Its Deposits
Banks were unable to hold on to deposits in November. By November 25, they were down 0.2-0.5 percent, or about 27 billion rubles.
Biggest Merger of Banks Set Into Motion
The biggest holders of MDM Bank and Ursa Bank Sergei Popov and Igor Kim respectively are setting up a united bank holding that will emerge as one of the major private financial holdings in Russia.
Govt to Rescue Mortgage Borrowers, Banks
Until yesterday, the leadership hadn't acknowledged the mere existence of large-scale default in payment under the individual mortgage credits.
The 300-Billion-Ruble Question
The government will allocate 300 billion rubles for state guarantees for credits to business, stated Finance Minister Alexey Kudrin.
Vneshekonombank May Shut Down
The state corporation Vneshekonombank may stop functioning unless the government allocates it 350 billion rubles, Vedomosti newspaper writes.
Bankrupt Individuals to Have 5-Yr Delay
The proposal of the Economic Development Ministry is that the Russians unable to pay debts will be able to undergo bankruptcy procedures and get the payment deferment of up to five years. The banks, to which the individuals owe 131.2 billion ruble aren't ready for such delay.
Banks Amass Reserves for Risky Loans to Corporations
The quality of banking credit portfolio deteriorated in October to such extent that the rates for establishing the reserve for potential losses under the corporate loans grew by over three fold and a half. Solvency of Russia's companies is ailing rapidly, and if the trend survives, the banks may violate the CBR requirements for capital adequacy.
Russian Firms Back Govt 'Dictatorship' Over Banks
Russia should take a tough line with banks to ensure a government rescue package restarts credit flows and reaches the real economy, the head of the country's trade and industry chamber told the president on Tuesday.
Fitch Sees Problems Ahead For Russia
Yesterday, the Fitch rating agency reviewed 17 developing economies and lowered the credit ratings of Bulgaria, Hungary, Kazakhstan and Romania. Russia's rating remained BBB+, but its prognosis was changed from stable to negative.
Russian Reformer And Banker Boris Fyodorov Dies
Boris Fyodorov, who advised on economic reform in the final years of the Soviet Union, served as Boris Yeltsin's finance minister and founded one of Russia's top investment banks, died on Thursday, his firm said.
Banks Pay for Future Dollar
The interbank MosPrime Rate stepped up to 22.67 percent yesterday, having set a new record since the start of its calculation in early 2007. The rate surged on difficulties with ruble liquidity. The biggest banks continue to accumulate foreign exchange, which they don't intend to sell apprehending further depreciation of Russia's ruble.
The Credit Professional Impropriety
Russia's banks are changing methods to assess potential borrowers, taking into account the field of their professional occupation. Raising money isn't easy for a person employed in construction, metallurgical and financial sectors. Those people have been added to the risky group on redundancy plans of their employers.
Brands Of Russia's Banks Still Expensive
The financial turmoil hasn't drastically lowered the worth of local brands in the banking sector, showed the Interbrand rating of most expensive brands in Russia. The brands of the Bank of Moscow, Alfa Bank and Russian Standard lost 2 percent to 5 percent from 2007 but the worth of VTB brand stood still.
Putin Sanctions Banks To Loan Money For Egypt's Projects
Russia's banks are capable of crediting and accepting guarantees of investors interested in the business on Egypt's market, Putin said by results of the talks.
Borrowers Tend To Drag Out
Financial collapse is affecting paying capacity of borrowers. The arrears of individual credits are growing 6 percent a month, i.e. twice as fast as before the crisis. So far, the banks have managed to set it off by the increase in credit portfolio. But individual crediting will become unprofitable for the banks if this trend survives.
Sberbank
Sberbank On a Buying Spree
The Savings Bank of Russia (Sberbank), the largest financial organization bank in Eastern Europe, has held preliminary negotiations on the acquisition of Raiffeisen Bank of Austria and the Hungarian OTP bank.
Russia's Sberbank Aimed At Belarus
Expansion Russia's biggest saving bank, Sberbank, will soon consider the possibility of launching a new bank or acquiring the existing bank in Belarus.
Sberbank Credits Oil, Gas Majors
Russia's biggest savings bank, Sberbank loaned funds to the country's biggest oil company Rosneft in November. Russia's gas monopoly Gazprom will raise loans with Sberbank's loan in the near future, local news agencies reported Friday.
Sberbank Announced Crisis Policy
The Savings Bank of Russia (Sberbank) has introduced supplemental risk management measures for the liquidity shortage and lower solvency, according to a statement released by the bank. Sberbank experts expect the difficulties to last another year and a half to two years. They are urging bank clients to take a conservative approach to business development plans.
The Russians Withdrew 80bn From Sberbank
The Russians withdrew 80 billion ruble from Sberbank in October, making that month the most unfortunate for the bank in the recent ten years.
Investment, Stocks, and Finance
Crash Casts Shadow On Russian Investment Climate
Two Russian billionaires are battling over the world's biggest palladium and nickel company, and so far there has been one major casualty: Russia's reputation as a place to invest.
Mutual Funds Still in Crisis, But Less So
Private investors withdrew 724.4 million rubles from mutual funds in November, according to investfunds.ru. BFA management company lost the greatest chunk of them, 226.5 million rubles, although Finansist has suffered the greatest losses overall, with 228.2 million withdrawn. Troika Dialog clients withdrew 120.2 million rubles.
Int'l Fin. Center Plans Still a Go
In spite of the crash of autumn 2008, plans remain at least nominally to create an international financial center in Moscow in 2009 and 2010 based on the best world models.
Liquidity Won't Go West
The efforts of the Central Bank and government to stop the outflow of capital from Russia are continuing.
Foreigners Leave Russian Stock Market
The Russian stock market has not been able to stabilize for any considerable length of time. Yesterday, Russian stock indexes lost 10.7126 percent. Incautious declarations and actions by Russian officials are making rubles assets less attractive.
World Bank Sees $50 Bln Cap Outflow From Russia
Some $50 billion in net capital is expected to flee Russia this year, the World Bank said in a report on Tuesday.
WTO And Russia's Future: An Industry Perspective
At a recent Kennan Institute talk, James Class, Assistant Vice President, International Affairs (Europe), Pharmaceutical Research and Manufacturers of America, discussed Russia's WTO accession process from the perspective of the research-based pharmaceutical industry.
Russia And Global Shareholding
Two events from the last couple of days demonstrate how the past has failed and what needs to happen now and in the future to benefit us all.
Authorities to Halt RTS, MICEX Trading If Index Slumps
Russia's Federal Financial Market Service introduces new procedures for halting the trading in 2009.
Stock Market Worse Off than Economy
The Russian stock market, which has been in sharp decline recently, does not reflect the real sector, Deputy Prime Minister and Finance Minister Alexey Kudrin told journalists Thursday. "Now the financial markets do not objectively reflect the real sector," he said during a break in the United Russia Party congress. "Unfortunately, we have to admit that."
Retail
Wal-Mart's Ruble Trouble
Why the world's biggest retailer struggles in Russia.
Real Estate and Development
Moscow Real Estate Prices Still Falling
Real estate prices continued to fall in Moscow November 10-17. According to the Real Estate Market Indicators agency, the average cost of a square meter of housing in the Russian capital is $5927. Apartments in modern buildings with panel construction 16 stories or more tall and other large apartments lost the most values last week, falling 1.8 percent to $5796 per square meter. Apartments in other panel buildings lost 1 percent of their value (to $5532).
Commentary
Economic Prognosis
December is here, and Vlast economic weekly is making its economic prognosis for the coming month as usual. Experts will answer the following questions: what will happen to the dollar on the Russian currency market, how consumer prices will change, what world oil prices will be and how the dollar and euro will fare on the world currency market.
Forecast For 2009: Stagnation, Inflation And Inaccessible Loans
On November 19, Central Bank governor Sergei Ignatyev and Finance Minister Alexei Kudrin came to parliament to answer questions regarding options for weathering the financial crisis.
Russia's Path: Boom or Bust
Russia has potential but faces multiple constraints, report says.
Russian Businesses Optimistic Despite Gloom
Russian top managers are optimistic about business prospects in the medium term. Most of them actually expect their profits to rise over the next three years, also hoping to have enough cash for development projects
Gov't Expects 2 More Yrs. of the Same
The economic crisis in Russia will last two more years, according to a report on competitiveness during the world financial crisis published by a Russian State Council working group. Russia's Economy: How Bad Will It Get?
The slowdown in Russia is part of the global epidemic, but after years of heady growth, the suddenness of the reversal has come as a shock.
World Bank Sees Hard Year in Russia
The World Bank has made its first evaluation of possible social consequences for Russia of the world financial crisis. It is forecasting that unemployment will reach 5.9 percent this year and 6.6 percent in 2009. It is currently 5.3 percent. The poverty rate in the country will fall from its current 13.4 percent to 9.5 percent next year, rather than to 8.6 percent as previously forecast. (It was 29 percent in 2000).
Gas and Oil
Putin Gives E.On a Guarantee
Putin received E.On chief Wulf Bernotat on Friday and called him "a strategic partner in the full sense of that word."
Rosneft Borrows at Large on Vice Premier's Support
Government-controlled Rosneft received over $4.5 billion in the past two months from the state banks.
Each 7th Barrel Stuck in Russia
Russia's oil exports fell 17.6 percent on year and 15 percent on month in November. The key reason was the high export duty that stripped that business off any profits to the companies. The output went down as well, as the companies lack funds to invest in production.
Rosneft Owes Half of Its Market Cost
The arrears of Rosneft reached $20 billion, RIA Novosti reported citing the company's president Sergei Bogdanchikov. The tricky point is that Rosneft capitalization on RTS was slightly above $40 billion as of November 26.
Oilmen Given the Break-Even Chance
Russia's oilmen have finally won from the government the reduction in period of oil price monitoring to calculate the oil export duty. As a result, the duty will be $192.1 per a ton from December 1 and that rate will enable the companies to generate profit if a barrel of oil costs roughly $50 and the production prime cost equals $10.
Russia Says It Is Not Forming Natural Gas Cartel
Russian President Vladimir Putin sought to ease fears about his planned talks with other natural gas exporters, saying Tuesday that Russia was not forming a gas cartel.
Arctic Treasures Prove Elusive
Russia may have to forget its ambitious dreams of Arctic oil and gas.
Russia's Oil Output Sank 0.6 Percent
Russia produced 406 million tons of oil, including gas condensate, in January through October, having lowered the output by 0.6 percent on year.
Europe to Save On Energy Carriers
The European Commission says gas imports will probably decline by 25 percent vs the basic scenario, the oil import will lose 13 percent and the import of coal will shed by 36 percent to 46 percent. Russia is the biggest gas supplier to the EU.
Small Oil Cos. Shut Down Production
Small oil companies in Tatarstan, which account for about 6 million of the 20 million tons of the oil independently produced in Russia, say they will stop producing on December 1. Selling oil has become unprofitable.They are asking to be exempted from the mineral use tax from December 1.
Russia's Oilmen Yet Unable To Raise $25bn In China
The negotiations of Russia and China about appropriating $25 billion to Rosneft and Transneft have reached the deadlock. The parties are unable to agree on the credit rate and repayment guarantee.
Russia's Finance Minister Declared Oil Price
Russia's authorities won't revise three-year budget that sets forth the Urals price of $95 per a bbl even if the price fells below $60. Vice Premier Alexei Kudrin announced yesterday the year's average prices at which the government will be able to stick to existing budget, spending the money of Reserve Fund, if necessary. These prices are $50 in 2009, $55 in 2010 and $60 in 2011.
Dudley Departs TNK-BP With Warning
BP's 50 per cent-owned Russian joint venture, faces "very testing" times, Robert Dudley warned as he stepped down as chief executive following a protracted shareholder battle.
Ukraine Conlict
Ukraine Ready to Winter With No Gas of Russia
Russia may slash gas supplies to Ukraine if Kiev refuses to sign a long-term contract. But Ukraine has the four-month stockpile of gas in its underground storage.
Russia Declared Another Gas War to Ukraine
Russia's gas monopoly Gazprom has threatened to hike the gas price for Ukraine to above $400 per a thousand cu meters if NAK Naftogaz fails to pay off the $2.4-billion debt.
Naftogaz Claims It Owes Nothing to Gazprom
Ukrainian Naftogaz denies any debts to Russia's gas monopoly Gazprom and calls on policymakers and mass media to halt their artificial speculations.
Ukraine Announced Desired Gas Price
The annual gas price for Ukraine should average less than $100 per a thousand cu meters in 2009, said people in the office of Ukrainian President Viktor Yushchenko.
Naftogaz to Spend IMF Money to Settle Gas Debt
Ukrainian Naftogaz that has faced difficulties with the payment of debts generated from gas supplies by RosUkrEnergo trader will probably refer to the IMF money, Interfax-Ukraine reported.
Gazprom Summons Ukraine to Court
In an effort to execute President Dmitry Medvedev's order to collect $2.4-billion gas debt from Ukraine by any legal means, Gazprom has elaborated a suit to Stockholm Arbitration. Ukraine has requested to postpone the payment for at least a month, and the parties still differ about the amount and the structure of arrears.
Gazprom
Gazprom Sends Germans To Siberia
The Russian monopoly is most interested in technical and financial support from its German partner in order to create a gas and chemical complex that will include the Kovykta gas condensate field.
Gazprom Can See Alaska from Its Door
Gazprom has begun negotiations with the American company ConocoPhillips on producing natural gas in Alaska and building the Den Ali pipeline from Alaska to Chicago.
Gazprom Linked Iran And Qatar
Russia's gas monopoly Gazprom, Qatar Liquefied Gas Company Ltd. and National Iranian Oil Co. will set up a venture to produce gas from Iran's South Pars field and liquefy it at Qatar's Ras Laffan.
EC Wants Its Own Gazprom Competitor
The European Commission is proposing to create the Caspian Development Corp., which would buy natural gas in Central Asia and coordinate investment in oil and gas production and transport in the region. Natural gas would move across the Caspian Sea and bypass Russia, destroying Gazprom's monopoly.
Four Banks Willing to Loan to Gazprom
Four banks have applied for granting a loan to Russia's gas monopoly, Gazprom. Of seven lots, only four attracted the bankers (three ruble and a dollar facility), while the remaining three lots (two euro loans and a dollar loan) didn't seem advantageous enough.
Gazprom Set to Yamal Development
Russia's gas monopoly, Gazprom, has set to developing the first field of the Yamal Peninsula, the Bovanenkovo field. In another effort, Gazprom has launched construction of Bovanenkovo-Ukhta gas pipeline that will add momentum to Yamal's project.
Pipelines
Russia Builds Pipeline around Belarus
Russian Prime Minister Vladimir Putin signed Decree No. 1754-r on December 1 on the design and construction of the second line of the Baltic Pipeline System.
Russian PM Casts Doubt Over US$9.4bn Pipeline
Prime Minister Vladimir Putin suggested Wednesday that Russia might call off construction of the Europe-bound Nord Stream natural gas pipeline unless Europe offers more support for the project.
Electricity
Ukraine No Longer Buys Electricity in Russia
Ukraine has halted electric energy imports from Russia today, December 1, 2008, RIA Novosti announced citing Fant Di, spokesman of Ukrainian Fuel and Energy Ministry.
Russia Energy Ministry To Stand Firm On Power Reforms
Russia's energy minister said on Friday he will oppose attempts to slow the liberalisation of electricity prices, which some industries want to curb at least until the financial crisis passes.
Medvedev Feeds India with Nuclear Power
Russia's President Dmitry Medvedev arrived in India yesterday. It is his first visit to India in president's capacity and the general environment of the event isn't particularly advantageous. The chance is that India's turn to the United States will lower the extent of political trust of Moscow.
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