The Rosstat has recently made public a new assessment of Russian GDP growth rates in May 2014. According to that assessment, last month’s growth amounted to 0.5% and sustained stagnation was observed in the Russian economy.
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The European Central Bank Stimulates Investment Activities in the Euro Area
06 june 2014
On June 5, the European Central Bank reduced the key interest rate by 0.1 p.p. fr om 0.25% per annum to 0.15% per annum, as well as the overnight deposit rate from 0% to -0.1% per annum. The lending rate decreased from 0.75% per annum to 0.4% per annum.
Real accrued wages per worker go up
04 june 2014
In the period between January and April of 2014, the household real disposable income accounted for 98.8% of the value seen in the same period of 2013. The measures aimed at implementing the Russian President's Executive Order of May 7, 2012, No. 597 On Measures to Implement State Social Policy for 2012 are still resulting in a faster growth in wages in education and healthcare and social services. In Q1 2014, the level of inequality slightly improved compared to that in Q1 2013.
Russia has a potential to boost grain exports
02 june 2014
Possessing the world's largest reserves of fertile lands (accounting for 55% of the world's fertile lands, of which 25% are arable lands, according to the World Bank's estimates), Russia may turn into a key player in providing the global food security. Over the last 25 years since the collapse of the Soviet Union, the former importer has turned into a world's largest grain exporter.
In North Caucasus, There is a Lack of Real Institutions
30 may 2014
In mid-May, the Ministry for Development of Regions of North Caucasus was established. Earlier, experts made forecasts that after the Olympic Games in Sochi the North Caucasian Federal District would be abolished and merged with the Southern Federal District. However, no aggregation of governing entities took place. On the contrary, in accordance with the model which has already been tested in the Far East and Crimea apart from the office of the special representative the Ministry for Development of Regions of North Caucasus was established.
The ruble’s depreciation kick-starts investment growth in mortgage residential lending
29 may 2014
The total volume of mortgage residential loans (MRLs) provided in Q1 2014 was 47.43% above the volume of such loans provided in Q1 2013. Furthermore, a total of 198082 loans worth Rb 334,73bn were provided during the quarter. The contraction of the share of overdue liability on MRLs is indicative of ongoing deterioration in the quality of mortgage loans.
Stabilization of the Ruble will Permit to Reduce the Effect of Transfer of the Exchange Rate Value into Prices
29 may 2014
At the St. Petersburg International Economic Forum, Alexei Ulyukaev, Minister of Economic Development said that in 2014 the maximum value of the inflation rate would be reached at the end of May and it would amount to 7.5% per annum.
The Russian Central Bank’s Forecast of the Capital Outflow at the Level of $85bn is Fairly Realistic
27 may 2014
Within the frameworks of the St. Petersburg International Economic Forum, Elvira Nabiullina, Chairman of the Central Bank of Russia said that in 2014 the Russian Central Bank forecasted a capital outflow fr om Russia at the level of $85bn-$90bn. It is to be noted that only in Q1 2014 the capital outflow amounted to $63bn with internal conversion and purchasing of cash foreign currency by households and companies accounting for two thirds of that amount.
As a Result, Accumulated Reserves Will Be Squandered
26 may 2014
Within the frameworks of the St. Petersburg International Economic Forum, Vladimir Putin, President of the Russian Federation promised cheap long-term financing to speed up growth rates of the Russian economy which is close to the state of stagnation. There May Be No Demand in Investments26 may 2014 At the International Economic Forum in St. Petersburg, Vladimir Putin, President of the Russian Federation declared that capitalization of Russia’s important backbone banking and financial institutions would be increased, including by way of conversion of subordinated loans into preferred stocks which measure would permit banks to extend more loans to the economy and make loans less expensive. The European Union Has Started a Third Dispute Within the Frameworks of the WTO Against the Russian Federation22 may 2014 On May 21, 2014, the European Union has submitted to the WTO's Secretariat a request to hold consultations with the Russian Federation on antidumping duties introduced by the Eurasian Economic Commission on low-tonnage trucks from Germany and Italy. On the Results of the 2011-2013 Privatization Program20 may 2014 A three-year privatization program for the 2011-2013 period – the first program in the latest Russian history – was approved by Resolution No.2102-r of November 27, 2010 of the Government of the Russian Federation.
Economic growth rate is expected to slow down14 may 2014 According to mass media, tomorrow the Ministry of Economic Development will present a new version of the socio-economic projection in the Russian Federation in 2014–2017. The Ministry of Economic Development (MED) recommends, as it did in the previous year, the most conservative scenario as the baseline scenario in the adjusted version of the projection. This scenario shows that Russian GDP will grow 0.5% in 2014, 2% y-o-y in 2015 (comparing to 1.1% and 2.4% respectively, as provided in the previous April version of the projection). Structural constraints dwarf economic growth in Russia14 may 2014 The Ministry of Economic Development (MED) has admitted that national economic development is facing increasingly serious problems, because GDP may have been declining. For example, the MED doesn't rule out a 0-01% decline in GDP in Q2 2014. Two quarters of falling GDP implies a technical recession. A proposal on amending the procedure for taxation of individual’s income fr om disposal of assets12 may 2014 The Ministry of Finance of Russia has published a blueprint of The Guidelines of the Fiscal Policy of the Russian Federation in 2014 and Planning Period of 2015 and 2016 and 2017. Overall, the blueprint contains no proposals which previously were not considered. At the same time, the foregoing document contains a few proposals which may be regarded as material. In particular, it has been suggested that the procedure for taxation of individuals’ income generated from the disposal of assets (property) should be changed. The currently applicable procedure for taxation of individuals’ income generated from the disposal of assets has some weak points. For example, even where a single residential property is owned at the moment of disposal of the living quarters and purchase of a new residential apartment, if the former has been owned for less than three years, the owner as physical body is to pay the tax. In practice, many individuals (physical bodies) tended to understate the value of purchase and sale transaction to avoid taxation and were exposed to the risk of losing their property. The blueprint suggests the income generated from the disposal of residential real property should be exempted from taxation regardless of ownership period, provided that the taxpayer owns no residential real property other than this one. Should the physical body (individual) owns more than one real property at the moment of disposal of the residential real property, the income from the disposal of the same is to be exempted from taxation if the following terms and conditions are met:
It should be noted that if this proposal is introduced in the Customs Union member countries, the terms of taxation of individuals’ income generated from the disposal of assets would look less appealing. In Kazakhstan, income from sold assets are subject to taxation, provided that the real property is owned less than a year, while in Belarus, to the extent that more than one real property of the same type have been sold within 5 years, i.e. the rule doesn’t cover the disposal of a residential apartment or a dacha (country house). This proposal will prevent the usage of tax avoidance schemes where no more than one residential property is owned, however residential apartments may become less appealing in terms of investment while revenues from taxation of individuals’ income generated from the disposal of assets (property) are expected to grow. Elena Velikova, a senior researcher of Gaidar Institute’s Tax System Development Department The Ministry of Finance of Russia has published a blueprint of The Guidelines of the Fiscal Policy of the Russian Federation in 2014 and Planning Period of 2015 and 2016 and 2017. Overall, the blueprint contains no proposals which previously were not considered. At the same time, the foregoing document contains a few proposals which may be regarded as material. In particular, it has been suggested that the procedure for taxation of individuals’ income generated from the disposal of assets (property) should be changed. The currently applicable procedure for taxation of individuals’ income generated from the disposal of assets has some weak points. For example, even wh ere a single residential property is owned at the moment of disposal of the living quarters and purchase of a new residential apartment, if the former has been owned for less than three years, the owner as physical body is to pay the tax. In practice, many individuals (physical bodies) tended to understate the value of purchase and sale transaction to avoid taxation and were exposed to the risk of losing their property. The blueprint suggests the income generated from the disposal of residential real property should be exempted from taxation regardless of ownership period, provided that the taxpayer owns no residential real property other than this one. Should the physical body (individual) owns more than one real property at the moment of disposal of the residential real property, the income from the disposal of the same is to be exempted from taxation if the following terms and conditions are met:
It should be noted that if this proposal is introduced in the Customs Union member countries, the terms of taxation of individuals’ income generated from the disposal of assets would look less appealing. In Kazakhstan, income from sold assets are subject to taxation, provided that the real property is owned less than a year, while in Belarus, to the extent that more than one real property of the same type have been sold within 5 years, i.e. the rule doesn’t cover the disposal of a residential apartment or a dacha (country house). This proposal will prevent the usage of tax avoidance schemes where no more than one residential property is owned, however residential apartments may become less appealing in terms of investment while revenues from taxation of individuals’ income generated from the disposal of assets (property) are expected to grow. Elena Velikova, a senior researcher of Gaidar Institute’s Tax System Development Department IMF has good reasons for announcing that Russian economy is facing the onset of a recession06 may 2014 Late in April 2014, Head of International Monetary Fund in Russia Antonio Spilimbergo officially announced that the Russian economy had entered a recession phase. |