Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
BREWING FINANCIAL CRISIS 2.0 Suggests RECESSION 2022 - 28th Jan 22
Financial Stocks Sector ETF XLF $37.50 Continues To Present Opportunities - 28th Jan 22
Stock Market Rushing Headlong - 28th Jan 22
The right way to play Climate Change Investing (not green energy stocks) - 28th Jan 22
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Russian Economy to Fall into Abyss?

Economics / Russia Aug 17, 2013 - 10:41 AM GMT

By: Pravda


Experts are debating whether Russia's economy has slipped into a recession or whether it is "safely" stagnant. The difference between stagnation and recession is of insignificant technical nature. However, the dispute over the terminology also has a political dimension, and for that reason it was joined but such heavyweights as Alexei Ulyukayev, the Economic Development Minister, who argues that the economy is stagnating.

We can say with absolute certainty that the country's economy is gradually but steadily slowing down. This process has been ongoing since 2011 and it looks like this is the moment when the raw materials locomotive is on the verge of a full stop, or even a rollback.

On Friday, the Federal State Statistics Service released data on the dynamics of the gross domestic product (GDP) in the second quarter of 2013. The index rose by 1.2 percent in annual terms. In the second quarter of 2012, GDP growth was 4.3 percent compared to the same period in 2011. In the first quarter of 2013, GDP growth slowed down to 1.6 percent.

Also on Friday, Deputy Economic Development Minister Andrei Klepach told Prime agency that the experts of the ministry were still hoping for a positive trend in the third quarter. He acknowledged that the information on preliminary estimate of economic growth in the second quarter published by Rosstat was worse than expected. In April, the Ministry expected growth of 2.1 percent in the second quarter. The adjusted April forecast of the Ministry for GDP growth for the year was 2.4 compared to the previously projected 3.6 percent.

So far the Ministry is not revising its forecast for the third quarter that reflects the expected growth of 2.5 percent. But the weak dynamic of the previous months leaves little chance of achieving this result. According to some leading indicators, the economy is falling. PMI index of business activity published last week by HSBC dropped below 50 points, which is a sign of an economic downturn.

Late in the week an international research firm Capital Economics stated that based on the result of the first six months of the year, the Russian economy entered into a recession. Since there is no final data from Rosstat as of yet, we can assume that we will see a classic recession, that is, the decline in the economy for two consecutive quarters. There are no doubts that the Rosstat and economic institutions will put off the statement of this unpleasant fact for as long as possible. They understand better than anyone else that the slow growth due to the increase in oil prices and the growth of mining has been exhausted.

"There is no recession. There will be no recession. Stagnation is probably a better term. The growth rates are very low; this is an institutional, structural, macroeconomic factor. This is something we will have to deal with for a very long time," said Economic Development Minister Alexei Ulyukayev in an interview with Prime.

The official suggested a timely revision of the forecasts that would take into account the outlook for global growth and competitiveness of the Russian economy. Ulyukayev did not rule out the revision of "Strategy 2020." "Without major changes in the institutional environment it is difficult to count on the fact that we will grow much higher than the rest of the world on average," said the Minister.

Experts of Capital Economics confirm that weak GDP dynamics is associated with a fall in consumption and investment. Opportunities for maneuvers in the short term exist only at the level of monetary actions. For example, a reduction in the rate of inflation may have a positive impact on real incomes and increased consumer spending.

However, this option seems too abstract. The most important factor that provokes inflation is an increase of tariffs due to the policy of the natural monopolies that limit them only in words. The planned inflation for the year is 5.6 percent. Since the beginning of the year through August the inflation has reached 4.5 percent, which means that it is unlikely that it will be kept within the stated limits through the end of the year.

The growth of budget expenditures could extend positive statistics, but according to the treasury, the general budget expenditures have declined by 1.4 percent to 5.9 trillion rubles. The income plan has been implemented by 48.6 percent of the forecast for the year, which is also not a good indicator.

Anatoly Miranovsky

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Pravda Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in