Russian economy in 2010. Trends and outlooks (Issue 32)

Publication date
Tuesday, 24.05.2011

Authors
V. Mau S. Borisov P. Trunin S. Sinelnikov-Murylev I. Sokolov T. Tischenko А. Siluanov А. Abramov S. Drobyshevsky А. Маmedov V. Nazarov А. Shadrin О. Izriadnova S. Tsukhlo Е. Astafieva Е. Iluykhina S. Misihina К. Kharina S. Prikhodko N. Volovik R. Yanbykh N. Shagaida N. Karlova Yu. Bobylev Yu Simachev А. Radygin G. Malginov М. Kuzyk I. Dezhina Т. Kliachko L. Karachurina S. Misihina N. Shmeleva Е. Apevalova G. Sternik G. Malginov О. Smirnova G. Zadonsky V. Zatsepin Е. Velikova А. Levashenko А. Kireeva I. Starodubrovskaya N. Mironova V. Tsymbal E. Trofimova

Annotation

The review provides a detailed analysis of main trends in Russia's economy in 2010. The paper contains 6 big sections that highlight single aspects of Russia's economic development: the socio-political context; the monetary and credit spheres; financial sphere; the real sector; social sphere; institutional challenges. The paper employs a huge mass of statistical data that forms the basis of original computation and numerous charts.

Contents

Section 1. The Socio-Political Context 9

1.1. Economic policies in 2010: a quest for innovations 9
1.1.1. The global economic crisis in 2010 9
1.1.2. Russia’s economic policy between crisis and modernization 12
1.1.3. A quest for a new growth model 18
1.1.4. The key challenge: structural modernization in conditions of a rent-based economy 21


Section 2. Monetary-Credit and Budgetary Spheres 25

2.1. The Monetary and Credit Policy 25
2.1.2. Inflationary Processes 28
2.1.3. The State of the Balance of Payments and Foreign Currency Market 31
2.1.4. Main Measures in the Monetary and Credit Policy Area 40
2.2. National budget 45
2.2.1. Assumptions of the 2010 budget policy 45
2.2.2. Budget policy at the stage of recovery 53
2.2.3. Main events in the budget area in 2010. 58
2.2.4. Analysis of the main parameters of the federal budget of the Russian Federation in 2011 – 2013. 60
2.2.5. Prospects of the fiscal policy development 66
2.3. Intergovernmental Fiscal Relations and Subnational Finances 67
2.3.1. Subnational Budgets in 2010 67
2.3.2. Financial Support from the Federal Budget 74
2.3.3. Federal Law “On the Federal Budget for 2011 and Planning Period of 2012 and 2013” as Related to Allocation of Intergovernmental Fiscal Transfers to Other Budget System Levels 77
2.4. Possible scenarios of social and economic development of the Russian Federation in 2011–2013 79


Section 3. Financial Markets and Financial Institutes 87

3.1. The Year of 2010: Recovery of Russian Financial Market 87
3.2. Factors Determining the Dynamic of the Russian Stock Market 92
3.3. Financial Institutions: Seeking for a New Growth Concept 110
3.3.1. Residual Forms of Support to the Financial Sector 110
3.3.2. Liquidity and Current Stability of the Banking System 111
3.3.3. Towards Recovery of International Reserves 115
3.3.4. Deposit Base Growth and Banks Deleveraging 117
3.3.5. The Issue of Converting Liquidity into Loans 117
3.3.6. Carry Trading Outlooks as a Growth Driver for the Banking System 119
3.4. Ruble Bond Market 124
3.5. Key Risks in Financial Market 132
3.5.1. Dependence of the stock market on oil prices 132
3.5.2. Risks of foreign capital outflow 134
3.5.3. Ruble devaluation risk in the medium term 135
3.5.4. Risk of excessive foreign borrowings accumulation by banks and real sector companies 135
3.5.5. Operational market and algorithmic trading risks 137
3.5.6. Risk in repo transactions 139
3.5.7. Low capacity of the internal market for financial services 140
3.6. Problem of attracting conservative institutional investors 141
3.7. The role of the stock market in the economy modernization and innovation promotion 145
3.7.1. Yield of financial and non-financial investments 145
3.7.2. Contribution of the corporate bond market in real capital growth 146
3.7.3. Effect of IPO shares on the economy 148
3.7.4. Private equity and venture capital funds 150
3.8. Impact of the crisis on the system of domestic savings 151
3.9. Banking System in the Russian Federation 156
3.9.1. Key Macroeconomic Figures which had an Impact on the Russian Banking Sector in 2010 156
3.9.2. Analysis of Annual Data on the Banking System: Balance Sheet 158
3.9.3. Quality of Assets 162
3.9.4. Profit and Loss in the Banking System 164
3.9.5. Analysis of the 500 Largest Russian Banks 166
3.10. The Market of Municipal and Sub-Federal Borrowings 172
3.10.1. The dynamics of market development 172
3.10.2. Changes in the Structure of the Accumulated Debt 173


Section 4. The Real Sector of the Economy 185

4.1. The Macrostructure of Production 185
4.1.1. Main Trends and Factors of Economic Development in 2010 185
4.1.2. Main Characteristics of the Use of GDP 189
4.1.3. Changes in the Structure of GDP, by Source of Income 192
4.1.4. The Dynamics and Structure of Production, by Type
of Economic Activity 200
4.2. Russian Industrial Enterprises in 2010 206
4.2.1. First Quarter: an Attempt to Recover from Crisis 206
4.2.2. Second Quarter: a Pause 210
4.2.3. Third quarter: there is no more optimism 213
4.2.4. Fourth Quarter: What is Going on in the Russian Industry? 217
4.3. Investments in the Real Sector of the Economy 227
4.3.1. Domestic internal investments in fixed assets 227
4.3.2. Foreign Investments 237
4.4. Oil-and-Gas Sector 245
4.4.1. The Dynamic of World Oil and Gas Prices 245
4.4.2. Dynamic and Structure of Production in the Oil-and-Gas Sector 249
4.4.3. Dynamic and Structure of Export of Oil and Gas 251
4.4.4. Price Dynamic for Energy Commodities on the Domestic Market 255
4.4.5. Tax Regulation of the Oil-and Gas Sector 257
4.5. Russian agrifood sector in 2010: performance and trends 260
4.5.1. General outline of agricultural performance in 2010 260
4.5.2. Situation on selected agricultural and food markets 265
4.5.3. Production of food products 271
4.5.4. Modification of agricultural policies in 2010 272
4.5.5. Conclusions and outlook 277
4.6. Foreign Trade 278
4.6.1. State of the Global Economy 278
4.6.2. Conditions of Russia’s Foreign Trade: Situation with Prices for Major Russian Exports 280
4.6.3. Main Indicators of Russia's Foreign Trade 283
4.6.4. Structure and dynamic of export 284
4.6.5. Structure and Dynamic of Import 286
4.6.6. Regulation of Russia’s Foreign Trade 288


Section 5. Social Sphere 299

5.1. Social Standard of Living 299
5.1.1. Monetary Income 299
5.1.2. Public Expenditure 302
5.2. Unemployment and New Lines of Inclusion of the Unemployed in Employment in Russia 304
5.2.1. Review of the Unemployment in 2010. 304
5.2.2. New Lines of Inclusion of the Unemployed in Employment in the Russian Federation in 2010. 308
5.3. Migration process 313
5.3.1. On-going migration 316
5.3.2. Temporary migration 318
5.3.3. Internal migration 326
5.4. Russian Education – Basic Development Trends in 2000–2010 329
5.4.1. Russian Education within a Global Context 329
5.4.2. Russian Education Financing Policy 331
5.4.3. Institutional Reforms in Education 336
5.5. The State of the Research and Innovation Sphere 340
5.5.1. The State of the Research 340
5.5.2. Measures on Promotion of Interaction with Representatives of the Expat Community 342
5.5.3. Plans on Reforming the Public Scientific Sector 348
5.5.4. Businesses’ Innovation Activity 349
5.5.5. Government Taking on Encouragement of Corporate Innovation Activity 351
5.5.6. Support of Small-Sized Start-ups 354
5.5.7. The Skolkovo Project as a Mini Model of the Innovation System 357
5.5.8. The Government’s Plans on Shaping Efficient Science 362


Section 6. Institutional Problems 365

6.1. Public Sector and New Privatization Policy 365
6.1.1. Public Sector Scope 365
6.1.2. Current National Privatization Policy 373
6.1.3. Public Sector Structure and Key Economic Agents 377
6.1.4. The Impact of the National Policy in the Field of Property Management on the Budget 384
6.1.5. A New Stage in Implementation of the National Policy in the Field of Privatization of State-Owned Property: Basic Priorities and Objects, Actions and Risks 390
6.2. The 2006-2010 Corporate Law: Some Results and Novelties 421
6.3. Land Use and Land Market in Russia: Situation, Legal Framework, Problems and Outlook 435
6.3.1. Land Titles and Land Plots Turnover Structure 435
6.3.2. The Problems of Land Relations in Russia 441
6.3.3. Federal and Regional Policy in the Sphere of Land Relations: some specifics 445
6.3.4. Lease of State and Municipal Land 449
6.3.5. Legal Framework on Land Issues: 2007–2010 451
6.3.6. Outcomes and Key Areas of Land Relations Development 455
6.4. Regulation of competition limiting concerted practices in 2008–2010 461
6.5. The Russian Housing Market in 2010: Stagnation and Beginning of the Recovery 471
6.5.1. Price Situation on the Secondary Housing Market 472
6.5.2. Activities in the residential housing market 475
6.5.3. Dynamics of Commissioned Housing Volumes 477
6.5.4. The Current Situation and the Prospect of Development of Institutional Structure of Housing Development 479
6.5.5. The Prospects of Development of the Housing Market 482
6.5.6. Support of Small-Sized Start-ups 484
6.6. The Military Economy and Military Reform in Russia 492
6.6.1. The Army Recruitment Problem 494
6.6.2. Problems of Design, Production and Supplies of Arms 497
6.6.3. The Military-Fiscal Policy and the Problem of Openness 500
6.6.4. Conclusions and Recommendations 511
6.7. The Year of 2010 – Completion of the Municipal Counter-Reform 512
6.7.1. Consolidated Administrations of the Municipal District and the District Center 512
6.7.2. Renunciation of Direct Mayoral Elections 515
6.7.3. Modification of the Election System 517


Annex 1. Specifics of Skolkovo Project Administration 521
Annex 2. International assistance in tax issues between the CIS countries, Common Economic Space and Framework Agreements: analysis of existing agreements 533
Annex 3. Mutual Assistance between the EU Countries for Recovery of Claims Relating to Taxes: Recent Modifications 536

Notes

UDC 338.1(470+571)
BBC 65.9(2Рос)-04
R95

Editorial Board: S. Sinelnikov-Mourylev (editor-in-chief), А. Radygin, N. Glavatskaya

Russian Economy in 2010. Trends and Outlooks. (Issue 32) – М.: Gaidar Institute Publishers, 2011. 544 pp.
ISBN 978-5-93255-316-9

Full version

Read / Download

Go to other releases →