Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

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