Russian economy in 2009. Trends and outlooks (Issue 31)

Publication date
Thursday, 20.05.2010

Authors
Е. Gaidar V. Mau P. Trunin I. Sokolov Е. Fomina А. Siluanov V. Nazarov А. Mamedov А. Abramov L. Mikhailov L. Sycheva А. Shadrin S. Drobyshevsky Е. Astafieva О. Izriadnova S. Tsukhlo Е. Iluykhina Yu. Bobylev N. Karlova N. Shagaida R. Yanbykh N. Volovik S. Prikhodko L. Karachurina Т. Kliachko L. Popovich S. Shishkin I. Dezhina G. Malginov А. Radygin B. Kuznetsov М. Kuzyk Yu. Simachev Е. Apevalova Т. Kiblitskaya О. Smirnova G. Zadonsky G. Malginov G. Sternik V. Zatsepin Е. Trofimova V. Tsymbal Н. Mironova I. Starodubrovskaya I. Tolmacheva А. Kireeva

Series
Russian economy

Contents

Crisis and Russia 11 

Chapter 1.  The socio-political context 36

1.1. The economic policy of 2009: between crisis and modernization 36
1.1.1. The main outcome of the crisis year:  institutional stability 36
1.1.2. The specific features of the anti-crisis policy of 2009: Russia against the background of other countries 37
1.1.3. The outlines of Russia’s anti-crisis policy 40
1.1.4. The priorities of Russia’s economic policy in 2010 44
1.1.5. The risks of the forthcoming period 46
1.1.6. Systemic challenges and new tasks 51

Chapter 2.  Monetary and Budgetary Spheres 55

2.1. Monetary Policy in the Crisis Period 55
2.1.1. Monetary Market 55
2.1.2. Inflationary processes 59
2.1.3. The State of the Balance of Payments and the Forex Market 61
2.1.4. Main Steps in the Monetary Policy 68
2.2. The State Budget 75
2.2.1. Overview of the Budget System of the Russian Federation 75
2.2.2. An Analysis of Main Parameters of Execution of the Budget of the Enlarged Government 76
2.2.3. Execution of the Federal Budget of Russian Federation 81
2.2.4. Main Parameters of Russia’s Federal Budget for 2010-2012 86
2.2.5. The Medium- and Long Term Prospective Avenues of the Fiscal Policy 89
2.3. Interbudgetary Relations and Subnational Finance in 2009 97
2.3.1. Subnational budgets in the grip of economic crisis 97
2.3.2. Financial aid from the federal budget 103
2.3.3. Modifications in the federal law in the area of interbudgetary relations and subnational finance in 2009. 106
2.3.4. The federal act “On the federal budget for 2010 and the period through 2012 with regard to earmarking interbudgetary transfers to other tiers of the budget system”. 107
2.4. The Russian financial market in 2008-2009: trends, crisis mitigation measures, institutional issues 111
2.4.1. Crisis and recovery in the Russian market 111
2.4.2. Similarities and differences between the 1997–1998 and 2008–2009 crises 115
2.4.3. Government crisis mitigation support measures in the financial markets 119
2.4.4. Measuring the effectiveness of crisis mitigation measures in the stock market 129
2.4.5. Principal financial market risks 140
2.4.6. The prospects of resuming carry trading operations 156
2.4.7. Attracting conservative institutional investors 159
2.4.8. The role of the stock market in economic modernisation and promoting innovation 165
2.4.9. The impact on of the crisis on the domestic savings system 172
2.4.10. Investment of pension savings in the mandatory pension insurance system 177
2.4.11. The Market for Municipal and Subfederal Borrowing 186
2.5. The Scenarios of Social and Economic Development of the Russian Economy in the 2010–2012 period. 196

Chapter 3.  Real Sector 208

3.1. Macrostructure of Production 208
3.1.1. Impact of Domestic and Foreign Demand on the Dynamics and Structure of GDP in 2008–2009 208
3.1.2. Principal Features of GDP Usage 214
3.1.3. Changes in the Structure of GDP Generation across Income Sources 216
3.1.4. Dynamics and Structure of Production across Types of Economic Activity 224
3.2. Russian Industry in 2008-2009: History of the Crisis According to Industrial Surveys 230
3.2.1. Crisis Statistics or Statistical Crisis 231
3.2.2. The overall dynamics of 2008-2009 crisis 232
3.2.3. Second half of 2008: beginning of the crisis and the collapse 235
3.2.4. The First Six Months of 2009: Stabilization 241
3.2.5. 2009, Second Semester: an Attempt to Overcome the Crisis 247
3.3. Real Sector Investments 257
3.3.1. Domestic Fixed Investments 257
3.3.2. Foreign investment 266
3.4. Oil and Gas Sector 274
3.4.1. Dynamics of the World Prices for Oil and Gas in 2008–2009 274
3.4.2. Dynamics and Structure of Production and Processing in the Oil and Gas Sector in 2008–2009 and during Preceding Period 278
3.4.3. Dynamics and Structure of Petroleum and Gas Export 281
3.4.4. Dynamics of Prices for Energy Commodities on Domestic Market 285
3.4.5. Features of Tax Regulation in Oil and Gas Sector in the Wake of the Crisis 287
3.5. Russian agrifood sector: performance and trends in the crisis period 291
3.5.1. General outline of agricultural performance 291
3.5.2. Production of other food products 297
3.5.3. Trends in the structure of food sales 299
3.5.4. Import of agricultural and food products in the crisis period 301
3.5.5. Changes in agricultural policies in the crisis conditions 302
3.5.6. Situation on selected agricultural and food markets 307
3.6. Foreign Trade 321
3.6.1. International Trade in the Wake of the Global Crisis 321
3.6.2. Russian Foreign Trade Outlook: Market Prices Trends for Key Items of Russian Export 322
3.6.3. Key Russian Foreign Trade Indicators 324
3.6.4. Export Profile and Dynamics 327
3.6.5. Import Profile and Dynamics 329
3.6.6. Russian Foreign Trade Regulation in the Global Crisis Environment 332
3.6.7. Government Priorities in the Sphere of Foreign Trade: Customs Union and WTO 336

Chapter 4.  The social sphere 351

4.1. The population’s finances and the consumer market 351
4.2. The Migratory Situation 355
4.3. Socio-cultural Sphere 372
4.3.1. Development of the Educational System in 2009 372
4.3.2. Health Care in 2009 393
4.4. The State of Research and Innovation Sphere 401
4.4.1. New Political and Technological Priorities in Scientific and Innovation Development 401
4.4.2. Crisis Impact on the State of Research and Development 404
4.4.3. Measures to Support the Best Universities and Organizations that Perform Research and Development Works: "Progressive Inequality" Development 407
4.4.4. Priorities of National HR Policy in Science 412
4.4.5. Development of International Relations 416
4.4.6. Support to Small Innovative Enterprises and Innovation Infrastructure 418
4.4.7. Tax Incentives for R&D Development 423

Chapter 5.  Institutional Problem 426

5.1. Property relations and the role of the public sector and privatization 426

5.1.1. The size, integral components and main features of the public sector 426
5.1.2. Mid-term privatization plans 431
5.1.3. Influence of the government presence in property on the government structural policy in various sectors, issues of strengthening of the government position 435
5.1.4. The effect of the federal government property policy on the budget revenues in 2000 – 2009. 442
5.1.5. Changes in the legislative and normative framework regulating the public sector 448
5.1.6. Possible impact of the financial crisis on the property relations and prospects of their development 450
5.2. Government Support of strategic companies: key instruments, specifics and practical implementation challenges 454
5.2.1. Specific measures and approaches to the support of backbone enterprises in crisis situation 454
5.2.2. List of systemic organizations of strategic importance: formation principles and composition 457
5.2.3. Key areas and instruments of government support to strategic companies: specifics, challenges and practical implementation progress 465
5.2.4. Overall evaluation of coverage and sector-based specifics of measures supporting strategic companies 486
5.3. Historical and future trends and legal issues related to 2003–2009 bankruptcies 489
5.3.1. Bankruptcy trends under the third Law on Insolvency (2003–2009) 490
5.3.2. 2003-2009 bankruptcy legislation: “identity crisis” 495
5.3.3. The judicial system and issues of self-regulation 503
5.3.4. 2009 draft legislation: the crisis as an impetus for addressing deficiencies 511
5.4. M&A Market Dynamics (2003–2009) 524
5.5 Corporate Governance and Legislation on Legal Entities 538
5.5.1. “Corporate” Rights 539
5.5.2. Dependence of the Boards of Directors 539
5.5.3. Legal Entities: Establishment of a System or Redistribution of the Spheres of Interest? 541
5.5.4. Raising of Responsibility of Managers and Founders  of Legal Entities 543
5.5.5. Change in Rules of Registration of Legal Entities 544
5.6. Monopoly Price Regulation in 2008–2009 546
Section 5.7-5,9
5.7. RF Real Estate Market 554
5.7.1. Land Market 554
5.7.2. Russian Housing Market in 2009: from the Crisis Downfall to Stagnation 559
5.7.3. Mortgage Market 577
5.8. The Military Economy and Military Reform in Russia 584
5.8.1. New Challenges for the RF Ministry of Defense and the Armed Forces 585
5.8.2. Increasing the Combat Readiness of the Armed Forces. 587
5.8.3. Optimizing the Structure and the Strength of the Armed Forces, and Increasing the Efficiency of Command and Control 589
5.8.4. Equipping the Armed Forces with Arms and Military Hardware 590
5.8.5. Improving the Military Education and Research System 591
5.8.6. Solving the Military’s Social Problems 591
5.8.7. Social Integration of the Retired Military 593
5.8.8. Improving the Planning, Programming, Execution and Performance Control System 594
5.8.9. The Military-Budget Policy and the Problem of Openness 595
5.9. 2009 as a year of municipal counter-reform 605

Annex 1, 2
Annex 1. A Review of Significant Changes in the Sphere of Fiscal Regulation and Civil Legislation in 2009 617

Annex 2. Major Trends of Amendments to Legislation Applicable to the Procedure of Tax Abuse Investigations in 2008–2009 640

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