Russian Economy in 2016. Trends and Outlooks. (Issue 38)

Publication date
Thursday, 25.05.2017

Authors
V.Mau, A.Bozhechkova, A.Knobel', A.Kiyucevskaya, P.Trunin, S.Belyov, A.Mamedov, E.Fomina, S.SHatalova, T.Tishchenko, A.Huzina, I.Arlashkin, N.Barbashova, A.Abramov, N.Avksent'ev, E.Grishina, A.Kireeva, A.SHadrin, M.Hromov, O.Izryadnova, S.Drobyshevskij, M.Kazakova, S.Cuhlo, YU.Bobylev, V.Uzun, N.SHagajda, N.Volovik, E.Avraamova, A.Burdyak, E.Grishina, D.Loginov, V.Lyashok, T.Maleva, N.Mkrtchyan, A.Polyakova, YU.Florinskaya, T.Klyachko, G.Tokareva, G.Sternik, S.Sternik, G.Mal'ginov, A.Radygin, E.Apevalova, N.Polezhaeva,N.Zudin, M.Kuzyk, YU.Simachev, I.Dezhina, V.Cymbal, V.Zacepin, K.Kazenin

Series
Russian Economy: Trends and Perspectives

Contents

Section 1. The lessons of stabilization and prospects of growth: Russia’s economic policy in 2016 9
1.1. Discussing the prospects for economic growth 9
1.2. Economic crisis and adaptation to the new reality: 2015 and 2016 outcomes 16

Section 2. Monetary and fiscal policy 27
2.1. Monetary policy 27
2.1.1. Key monetary policy decisions 27
2.1.2. Money market 29
2.1.3. Inflation processes 36
2.1.4. Balance of payments and exchange rate 39
2.2. Fiscal policy 45
2.2.1. Assessment of budgets of the budgetary system of the Russian Federation  45
2.2.2. The characteristic features of the federal budget 53
2.2.3. Intergovernmental fiscal relations and sub-national finance 62
2.2.4. Description of main off-budget funds 71

Section 3. Financial markets and financial institutions 77
3.1. The stock market recovery 77
3.2. The share market 83
3.3. The bond market 99
3.3.1. The market for non-government bonds 99
3.3.2. The market for government bonds 107
3.4. Derivatives market . 113
3.5. Financial intermediaries and MOEX infrastructure 115
3.6. Investors in the domestic stock market 119
3.7. Russian financial market risks 126
3.8. Municipal and sub-federal debt market 130
3.8.1. Market development dynamics 130
3.8.2. Debt structure 134
3.8.3. Domestic bond issues 134
З.9. Russia’s banking sector 139
3.9.1. Banking sector’s main trends 139
3.9.2. Banks and corporate sector 142
3.9.3. Banks and households 145

Section 4. The real sector of the economy 151
4.1. The macrostructure of production 151
4.1.1. The behavior of the Russian economy in 2016: internal and external demand 151
4.1.2. The expenditure components of GDP in 2012–2016: consumer and investment demand 156
4.1.3. Changes in the GDP structure by income source 160 4.1.4. The movement pattern and structure of production, by type of economic activity 163
4.2. Decomposition of Russia’s GDP growth rates in 2016–2019 165
4.3. Russian industrial enterprises in 2016 (on business surveys’ findings) 171
4.3.1. 2016: is industry still in crisis? 171
4.3.2. Dynamics of main indexes of Russian industry for 2016 175
4.4. Fixed investment 182
4.4.1. Investment resources and financial environment for investment 182
4.4.2. Tangible assets of the construction/investment complex 185
4.4.3. Fixed investment financing by source and by type of ownership 187
4.4.4. Fixed investment dynamics 189
4.5. Oil and gas sector 192
4.5.1. Dynamics of global crude oil and gas prices 192
4.5.2. Dynamics and structure of production in oil and gas sector 193
4.5.3. Dynamics and structure of oil and gas export 196
4.5.4. Domestic price dynamics on energy products 197
4.5.5. Prospects for Russian oil and gas sector 201
4.6. Growth factors in the agriculture of Russia 202
4.6.1. Agricultural production dynamics 202
4.6.2. The main growth factors of agriculture in 2016 205
4.6.3. The population’s access to food 211
4.7. Foreign trade 216
4.7.1. World trade outlook 216
4.7.2. Terms of Russia’s foreign trade, market conditions for major products of Russian export and import 218
4.7.3. Main indexes of Russian foreign trade 221
4.7.4. Regional pattern of Russia’s foreign trade 226
4.7.5. Regulation of Russia’s foreign trade 228
4.8. Russia’s application of WTO dispute settlement mechanisms 232
4.8.1. Updates on the situation in 2016 regarding WTO trade disputes to which Russia is acting as complainant 233
4.8.2. Updates on the situation in 2016 regarding WTO trade disputes to which Russia is acting as respondent 234
4.8.3. Updates on the situation in 2016 regarding WTO trade disputes to which Russia appears as third participant 236

Section 5. Social sphere 249
5.1. Household sector: income, consumer and labor markets 249
5.1.1. Household income and poverty level of the population 249
5.1.2. Retail trade turnover and dynamics of consumer prices 253
5.2. Labor market dynamics 256
5.3. Social sentiment 259
5.3.1. Vision of the scale of the crisis by the population 259
5.3.2. Socio-economic implications of the crisis 261
5.3.3. Adaptive behavior of the population 262
5.4. Migration 264
5.4.1. Long-term migration 264
5.4.2. Temporary migration 266
5.5. Education system 268
5.5.1. Reforming general education: teachers’ salaries and professional growth 269
5.5.2. Vocational education 275
5.6. Housing market and housing construction sector 280
5.6.1. Mortgage lending 280
5.6.2. Mortgages on plots of land 285
5.6.3. Dynamics of prices on residential real estate 286
5.6.4. Housing market of the capital region: main factors which determined price dynamics and activity on the market 290
5.6.5. Construction, commissioning and supply of new housing 295
5.6.6. Institutional novations for real estate market 297
5.6.7. The forecast of development of the Moscow residential property market till 2020 303

Section 6. Institutional Changes 309
6.1. The public sector and privatization policy 309
6.1.1. The scope of public property ownership 309
6.1.2. Privatization policy 316
6.1.3. The presence of the State in the economy and the issues of management of economic subjects operating in the public sector 333
6.1.4. The budgetary effect of government property policy 339
6.2. Corporate control market: stages, specific features, regulation 348
6.2.1. Russia’s market for mergers and acquisitions: stages of evolution 348
6.2.2. Dynamics of market for mergers and acquisitions: Russia’s reverse trend to that of the rest of the world 351
6.2.3. Corporate conflicts: corporate raiding (asset grabbing) evolution in 2008–2016 359
6.2.4. Corporate legislation as applicable to mergers and acquisitions (2010–2016): civil legislation reforms 366
6.2.5. Antimonopoly M&A regulation practice in 2010–2016: legislative relaxation and government’s heavier involvement in the economy 376
6.3. Financial market regulation 2013–2016: new subjects and new requirements 380
6.4. Science-industry cooperation in Russia: current status, problems, effects of government support 393
6.4.1. The scale of interaction between Russian business companies, scientific research organizations and higher educational establishments in the innovation sphere 394
6.4.2. The productivity of interaction of Russian industrial enterprises with scientific research organizations and higher educational establishments in the innovation sphere 397
6.4.3. Problems and obstacles to the development of science-industry cooperation in Russia 403
6.4.4. Government promotion of science-industry cooperation and its results 408
6.4.5. The reasons for the low level of interaction between the science sector and businesses: some conclusions and generalizations 415
6.5. The situation in the sphere of science and innovation 423
6.5.1. New strategic documents 424
6.5.2. The scale and forms of budget funding allocated to research and development 426
6.5.3. Transformations in the former academic sector 428 6.5.4. Science at higher educational establishments 433
6.5.5. The problems with the performance assessment in the field of scientific research 437
6.5.6. Emigration of scientists and the plans for returning expat scientists to Russia 439
6.5.7. The changing innovation landscape 440
6.6. The new system of formation of the public contract in 2016: the main risks and prospects of development 449
6.6.1. Baseline and departmental lists of public jobs and services 450
6.6.2. Formation of the public contract 451
6.6.3. Implementation of the standardized financing principles 453
6.7. The North Caucasus: the main trends of 2016 456
6.7.1. Major investment projects in 2016 457
6.7.2. Federal elections in the republics of the North Caucasus: ‘political Islam’ and the increasing role of businesses based in other regions 459
6.7.3. Terrorist activities 462
6.8. Defense economy and military reform in Russia 463
6.8.1. Military recruitment and social policy 463
6.8.2. Military-technical policy 466
6.8.3. Military and financial policy 468

Full version
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