Russian Economy in 2012. Trends and Outlooks. (Issue 34)

Publication date
Tuesday, 28.05.2013

Authors
V. Mau N. Luksha P. Trunin S. Belev T. Tischenko A. Alaev A. Mamedov V. Nazarov A. Abramov M. Khromov A. Shadrin O. Izriadnova S. Tsukhlo E. Iluykhina Yu. Bobylev N. Karlova V. Uzun N. Shagaida R. Yanbykh N. Volovik S. Prikhodko S. Misikhina L. Karachurina T. Kliachko I. Dezhina G. Malginov A. Radygin S. Avdasheva A. Shastitko E. Apevalova M. Kuzyk Yu. Simachev G. Zadonsky G. Sternik V. Zatsepin V. Tsymbal K. Kazenin I. Starodubrovskaya I. Tolmacheva

Series
Russian Economy: Trends and Perspectives

Contents

Section 1. The socio-political context 9

1.1. Economic policy during 2012: Between modernization and stagnation 9
1.1.1. Some global trends 9
1.1.2. Russia in search of economic stability 16
1.1.3. Priorities in medium term economic policy 20

Section 2. The Monetary and Budget Spheres 27

2.1. The Monetary Policy 27
2.1.1. The Money Market 27
2.1.2. Inflation Processes 32
2.1.3. The Main Developments in the Field of Monetary Policy 35
2.1.4. The Balance of Payments и and the Exchange Rate of the Ruble 40
2.2. State budget 47
2.2.1. General characteristics of the budget system
of the Russian Federation 48
2.2.2. Analysis of the Basic Tax Revenues to the Budget System
of the Russian Federation 51
2.2.3. Expenditures of the Budget System 57
2.2.4. Analysis of the RF Federal Budget Key Indicators
in 2012 and for the Period of 2013-2015 59
2.2.5. Fiscal Policy Outlooks 66
2.3. Intergovernmental Relations and Subnational Finance 69
2.3.1. Subnational budgets in 2012 69
2.3.2. Financial aid from the federal budget 79
2.3.3. Performance assessment of the executive authorities
of the Russian Federation 82
2.3.4. Federal law of 3 December 2012 No. 216-FZ "On the Federal Budget
for 2013 and the planning period to 2014 and 2015" for the allocation
of intergovernmental transfers to other levels of the budgetary system 86

Section 3. Financial Markets and Financial Institutions 91

3.1. The Post-Crisis Recovery of Russia's Financial Market 91
3.2. The Market for Shares Issued by Russian Companies 100
3.2.1. Dependence on the Global Conjuncture of Prices 100
3.2.2. Inflow/Outflow of Foreign Portfolio Investment 103
3.2.3. Currency Exchange Rates 107
3.2.4. Competition on the Domestic Share Market 108
3.2.5. Preliminary Results of the Merger of the RTS and MICEX 115
3.2.6. A New Regulation Model in the Financial Market 125
3.3. Financial Institutions in Search of New Ideas for Growth 129
3.3.1. Restrictions on Carry Trading and Growth of Financial Leverage 129
3.3.2. Liquidity and the Current Stability of the Banking System 132
3.3.3. Growth of Crediting 135
3.4. The Market for Ruble-denominated Bonds 137
3.4.1. The Government Securities Market 137
3.4.2. The Situation on the Corporate Bond Market 139
3.4.3. Competition on the Corporate and Regional Bond Market 141
3.5. An Analysis of Financial Market Risks 148
3.5.1. The Halt in the Share Market Growth Caused by the Price Factor 148
3.5.2. The Risks of Foreign Capital Outflow 149
3.5.3. The Risks of the Ruble's Depreciation
in the Medium-term Perspective 150
3.5.4. The Risks Presented by the Foreign Debt of Banks
and Non-financial Businesses 151
3.5.5. The Risks Associated with Carry Trading 153
3.5.6. The Operational Risks in the Stock and Futures Markets 153
3.5.7. The Risks of Repo Operations 155
3.5.8. The Problems Involved in Implementing the Financial
Market Development Policy 155
3.6. The Issues Involved in Attracting Conservative Institutional Investors 156
3.7. The Stock Market's Role in the Modernization of the National Economy 158
3.7.1. The Contribution of the Corporate Bond Market
to Real Capital Growth 158
3.7.2. The Impact of IPOs on the Economy 159
3.8. The Development of Russia's Domestic Savings System 161
3.9. Market Failures and the State's Presence on the Financial Market 164
3.10. Russia's banking sector in 2012 166
3.10.1. Key trends 166
3.10.2. Retail segment bank transactions in 2012 168
3.10.3. Relationship between banks and corporate customers 170
3.10.4. Foreign transactions in the banking sector 172
3.10.5. Strengthening state influence on the banking sector 173
3.10.6. Banking regulation 174
3.10.7. Banking sector development prospects in 2013 175
3.11. Municipal and Sub-federal Loans Market 176
3.11.1. Market development dynamics 176
3.11.2. Changes in accumulated debt structure 178
3.11.3. Structure of borrowings 178

Section 4. The Real Sector of the Economy 187

4.1. Production Macrostructure 187
4.1.1. Post-crisis performance of the Russian economy 187
4.1.2. The main characteristics of GDP utilisation 192
4.1.3. Changes in the GDP structure by source of income 194
4.1.4. Dynamics and pattern of production by economic activity 197
4.2. Russian Industrial Enterprises (on the basis of the surveys) 200
4.2.1. Is the Russian Industry Getting Involved in the Second
Wave of the Crisis? 201
4.2.2. Dynamics of the Main Indices of the Russian Industry 203
4.2.3. Lending to Russian Industry 2012 213
4.2.4. Personnel Problems of the Russian Industry in 2012 216
4.2.5. Consequences of Labor Shortages in the Russian Industry 219
4.2.6. Assessment of the Government Anti-Crisis Measures 223
4.2.7. The Anti-Crisis Package of Russian Industrial Enterprises 227
4.3. Investment activities 231
4.3.1. Domestic capital investments 231
4.3.2. Foreign investments 238
4.4. The oil and gas sector 243
4.4.1. The dynamics of world prices for oil and gas 244
4.4.2. The dynamics and structure of production in the oil and gas industry 246
4.4.3. The dynamics and structure of oil and gas exports 249
4.4.4. Trends in the prices for energy goods on the internal market 253
4.4.5. Tax regulation of the oil and gas sector 254
4.5. Russian Agriculture and Agricultural Policies in 2012 259
4.5.1. General Outline of Agricultural Performance 259
4.5.2. Situation on Selected Agricultural and Food Markets 265
4.5.3. Changes in Priorities of Agricultural Policies in 2012
and for the Period of 2013-2020 271
4.5.4. Assessment of Outcomes of Russia's Accession to the WTO 281
4.5.5. Recommendations for Economic Policies 284
4.6. Foreign Trade 287
4.6.1. The State of Global Economy 287
4.6.2. Terms of the Russian Foreign Trade: Market Prices
for the Major Exported and Imported Goods 290
4.6.3. Key Indicators of the Russian Foreign Trade 293
4.6.4. Russian Foreign Trade in Terms of Geography 300
4.6.5. Russian Foreign Trade Regulation 301

Section 5. Social Sphere 307

5.1. Living Standards 307
5.1.1. Personal real income: poverty and extreme poverty
in Russia measured by national poverty method 307
5.1.2. Poverty level in Russia measured by international
comparative methods applied to developing countries 309
5.1.3. Poverty level in Russia measured by international
comparative methods applied to developed countries 310
5.1.4. Population consumption dynamics 311
5.2. Migration Processes 313
5.2.1. Legislative Initiatives 313
5.2.2. Permanent Migration Scale and Dynamics 316
5.2.3. Migration with CIS Member Countries 318
5.2.4. Labor Migration 321
5.2.5. Russia's Internal Migration 325
5.3. Key trends in the education system: results of 2012 327
5.4. State of Science and Innovation in 2012 337
5.4.1. From Innovation to Science 337
5.4.2. State Program for the Development of Science and Technologies 340
5.4.3. Monitoring of RAS Institutions' Efficiency 342
5.4.4. State Support of Science in Higher Education Institutions 343
5.4.5. Research Cadres as the Core Element of Institutional Reforms 348
5.4.6. Foreign Scientific Foundations and International Scientific
Cooperation in the Context of Changes in Legislation 352
5.4.7. Support and Encouragement of Technological Innovation 355

Section 6. Institutional Issues 367

6.1. Public Sector and Privatization 367
6.1.1. Public sector dynamics in the Russian economy 367
6.1.2. Privatization Policy 373
6.1.3. State participation in the economy and structural policy 382
6.1.4. Budget effect of the state property policy in the period
between 2000 and 2012 388
6.1.5. A New State-Owned Property Management Program 394
6.2. Antimonopoly policy in Russia in 2011-2012:
after the ‘Big Four' case 400
6.2.1. General Characteristics of antimonopoly legislation application 401
6.2.2. "Third antimonopoly laws package": before and after 406
6.2.3. Competition promotion initiatives: interception attempts 418
6.2.4. Challenges in the development and application of competition
legislation in Russia 421
6.3. Bankruptcies in 2011-2012: less bankruptcies, new regulation,
draft law on debt reorganization 422
6.3.1. Dynamics of bankruptcies (2011-2012) 422
6.3.2. Bankruptcy legislation in 2011-2012 425
6.3.3. Likely innovations in 2013: draft law on Russia's nationals'
debt restructuring 432
6.4. Russia's Innovation Promotion Policies: Their Evolution,
Achievements, Problems and Lessons 435
6.4.1. Introduction: A General Framework for Elaborating and Estimating
an Innovation Policy 435
6.4.2. The Main Instruments and Development Phases
of the Government Innovation Promotion Policy in the 2000s 441
6.4.3. Specific Features of the Instruments Applied
in the RF Government's Innovation Promotion Policies,
and Their Influence on the Enterprises Operating in the Real Sector 463
6.4.4. General Assessment of Russia's Innovation Policy 467
6.4.5. Conclusions and Lessons for the Future 474
6.5. Russia's Real Estate Market 479
6.5.1. The Land Plots Market 479
6.5.2. The Dynamics of Residential Housing Commissioning 487
6.5.3. Housing Prices 491
6.5.4. Housing Mortgage Lending 500
6.5.5. The Prospects for the Housing Market's Development 508
6.6. The military economy and military reform in Russia 510
6.6.1. Military staffing and social policy 510
6.6.2. Military-technical policy 511
6.6.3. Reforms of the financial security of the Russian AF 513
6.6.4. Military and financial policy 514
6.7. North Caucasus in 2012: results and risks 525
6.7.1. Investment projects and the interests of local communities 525
6.7.2. Renaissance of the national movement in the North Caucasus 529
6.7.3. Dagestan: the dynamics of intra-confessional relations in Islam 534
6.8. Changes in the Legislation on the Activities
of Non-Profit Organizations 2012 541

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