Russian Economy in 2013. Trends and Outlooks. (Issue 35)

Publication date
Tuesday, 27.05.2014

Authors
V. Mau, A. Bozhechkova, A. Kiyutsevskaya, P. Trunin, А. Mamedov, S. Belev, M. Deshko, А. Alaev, I. Arlashkin, A. Deryugin, V. Nazarov, А. Abramov, М. Khromov, А. Shadrin, О. Izriadnova, S. Tsukhlo, Е. Iluykhina, Yu. Bobylev, N. Karlova, V. Uzun, N. Shagaida, R. Yanbykh, N. Volovik, S. Misikhina, L. Karachurina, Т. Kliachko, I. Dezhina, G. Malginov, А. Radygin, Yu. Simachev, М. Kuzyk, B. Kuznetsov, E. Pogrebniak, Е. Apevalova, N. Polezhaeva, G. Zadonsky G. Sternik, V. Tsymbal, V. Zatsepin, I. Starodubrovskaya, K. Kazenin, I. Tolmacheva

Series
Russian Economy: Trends and Perspectives

Contents

Section 1. The socio-political context 9
1.1. Challenges of Russian economic growth: reconstruction or acceleration? 9
1.1.1. The global economic crisis 9
1.1.2. Russian socio-economic performance in 2013 12
1.1.3. Challenges of economic growth 21
1.1.4. Socio-economic risks in the short and medium term 22
1.1.5. Priorities of an economic policy aimed at consolidating growth 27

Section 2. Monetary and budgetary sector 33
2.1. Monetary policy 33
2.1.1. Money market 33
2.1.2. Inflation processes 39
2.1.3. Key measures in the sphere of monetary and FX policy  43
2.1.4. Balance of payments and ruble exchange rate 48
2.2. State budget  54
2.2.1. Key trends in the development of the budgetary system of the Russian Federation in 2013  55
2.2.2. Analysis of the main tax receipts to the budgetary system of the Russian Federation  57
2.2.3. Budgetary expenditure  62
2.2.4. State debt of the Russian Federation  64
2.2.5. Analysis of the main parameters of the federal budget of the RF in 2009-2013 and for the period 2014-2016  67
2.2.6. Prospects for the fiscal policy in 2014-2016  72
2.3. Inter-budget relations and sub-national finances  74
2.3.1. Analysis of the main features of the consolidated budgets
of constituent entities of the Russian Federation  74
2.3.2. Financial assistance from the federal budget  80
2.3.3. Analysis of state and municipal debt 84
2.3.4. Conclusions with regard to the allocation of inter-budget transfers to other levels of the budgetary system provided by
the Federal Law dated 2 December 2013, No.349-FZ 'On the Federal Budget for 2014 and the Planning Period until 2015 and 2016' 86

Section 3. Financial markets and financial institutions  93
3.1. Post-recession stock market recovery 93
3.1.1. Comparing the parameters of two crises in Russia  93
3.1.2. Long-term and short-term financial crises 95
3.1.3. Market recovery specific features in the BRICS countires 97
3.2. Russian stock market's competitiveness  102
3.2.1. Stock markets' liquidity 102
3.2.2. Stock market capitalization  106
3.2.3. Competition with foreign stock exchanges  108
3.2.4. Integrating RTS and MICEX exchanges 110
3.3. Russia's stock market  117
3.3.1. Stock market's dependence on global price movement 117
3.3.2. Stock market's dependence on foreign portfolio investors 119
3.3.3. Stock market segments in the Moscow Exchange  124
3.3.4. Competition between the internal stock market participants 127
3.4. Ruble-denominated bond market 130
3.4.1. Government securities market  130
3.4.2. Corporate bond market  134
3.4.3. Competition in the corporate and regional bond markets  137
3.5. Financial system' and mediators' contribution to economic growth 142
3.5.1. Financial system's influence on economic growth  142
3.5.2. Corporate bonds and economic growth  146
3.5.3. IPO of shares' effect on the economy  148
3.6. Investors in the Russian stock market 150
3.6.1. Internal institutional investors  150
3.6.2. Individual domestic investors  151
3.6.3. Foreign conservative investors  155
3.7. Risks in the financial market 160
3.7.1. Prices of shares and dynamics of crude oil prices  160
3.7.2. Foreign capital outflow  161
3.7.3. Risks related to banks' and non-financial businesses' external debt  161
3.7.4. Risks related to carry trading as speculative strategy  163
3.7.5. Transaction risks in the stock market and Forts market  163
3.8. Regulation and supervision problems 164
3.9. The Russian banking sector 172
3.9.1. Main trends  172
3.9.2. Banks and households  174
3.9.3. Banks and the corporate sector  176
3.9.4. Banks and the outside world  178
3.9.5. Banks and the state  179
3.10. The Market for Municipal and Subfederal Borrowings  180
3.10.1. The Dynamics of the Market's Development  180
3.10.2. Cumulative Debt Structure  181
3.10.3. Structure of Borrowing  182

Section 4. The Real Sector of the Economy191
4.1. Macrostructure of production 191
4.1.1. Post-crisis dynamics of the Russian economy in 2009-2013  191
4.1.2. Main features of GDP use in 2009–2013  196
4.1.3. Changes in structure of GDP by sources of income  200
4.1.4. Key trends and changes in the efficiency of use of labour resources  203
4.1.5. Dynamics and structure of production by type of economic activity  206
4.2. Russian industrial enterprises in 2013 209
4.2.1. Russian industry: from stagnation to ...?  210
4.2.2. Workforce problems of the Russian industry  218
4.2.3. Investment problems of Russian industry  225

4.2.4. Precautions of industrial enterprises against the second wave of the crisis 229
4.2.5. Estimate of industry's demand for anti-crisis measures to be taken by the government  231
4.3. Investment activity 234
4.3.1. Internal domestic investments in fixed capital  234
4.3.2. Foreign investments  244
4.4. Oil and gas sector in 2013 250
4.4.1. Dynamics of global oil and gas prices  250
4.4.2. Dynamics and structure of production in the oil and gas sector  252
4.4.3. Dynamics and structure of oil and gas exports  255
4.4.4. Dynamics of prices for energy products on the domestic market  257
4.4.5. Tax regulation of the oil and gas industry  259
4.5. Russian agriculture: the first year within the World Trade Organization 264
4.5.1. General outline of agricultural performance  264
4.5.2. Situation on selected agricultural and food markets  269
4.5.3. Implementation of the State Program in 2013  273
4.5.4. Recommendations for policymakers  278
4.6. Foreign trade 283
4.6.1. The state of the global economy  283
4.6.2. Conditions of Russian foreign trade: the situation for prices of import and export of basic goods  286
4.6.3. Major indicators of Russian foreign trade  289
4.6.4. Geographical structure of Russian foreign trade  295
4.6.5. Regulation of Russian foreign trade  296

Section 5. Social Sphere 307
5.1. The Living Standards of Russia's Population  307
5.1.1. Population Income  307
5.1.2. Socioeconomic differentiation  309
5.1.3. Subsistence level and poverty  310
5.1.4. The Child Poverty Rate and the Effect of Social Policies on the Child Welfare Levels in the Russian Federation and the European Union  311
5.2. The Migration Policy and Migration Processes  315
5.2.1. Changes in the Institutions of Residence and Temporary Residence in the Russian Federation  315
5.2.2. The Effect of Migration on the Number and Pattern of the Country's Population  320
5.2.3. External Labor Migration  322
5.2.4. Migration Inside the Russian Federation  327
5.3. Key Trends in the Education System Development  330
5.4. Situation in Russian science and innovation sector 344
5.4.1. R&D expenditures and results  344
5.4.2. Principal changes to the national science and innovation policy  345
5.4.3. Institutional changes  346
5.4.4. Establishing Russian Scientific Foundation  353
5.4.5. Personnel issues in science and ways to a solution  355
5.4.6. Relations within the innovation system: technology platforms and clusters  359
5.4.7. Innovation activity incentives  361
5.4.8. Changes to the regulation of rights to the results of intellectual activity  363

Section 6. Institutional problems 365
6.1. Public sector and privatisation 365
6.1.1. The scale of the public sector in the Russian economy  365
6.1.2. Privatisation policy  369
6.1.3. Presence of the State in the economy and structural politics  383
6.1.4. Public sector government issues  387
6.1.5. Budget effect of the government property policy in 2000–2013  389
6.2. Industrial policy in Russia in 2000–2013: institutional features and key lessons 395
6.2.1. The industrial policy: terms and features, evolution of models and change in government attitude  395
6.2.2. Russian industrial policy in the 2000s: conditions and specifications, factors of change, interest groups  399
6.2.3. Analysis of examples of the formation and implementation of industrial policy in development of the automotive and nanotechnology industries  413
6.2.4. Some general lessons of industrial policy implementation in Russia  426
6.3. Bankruptcies in 2012-2013: Growth in the Number of Bankruptcies of Financial Institutions and Individual Entrepreneurs and the Introduction of New Regulations 429
6.3.1. The Dynamics of Bankruptcies in 2012–2013  429
6.3.2. Bankruptcy Legislation in 2012–2013: Special Norms for Special Societies  433
6.4. Financial Markets: Government Regulation vs Self-regulation  437
6.5. The Real Estate Market in the Russian Federation 442
6.5.1. The Land Plots Market 442
6.5.2. The Dynamics of Residential Housing Commissioning 451
6.5.3. Prices on the Housing Market 458
6.5.4. Housing Mortgage Lending 462
6.5.5. The Prospects for the Housing Market's Development 469
6.6. Defense economy and military reform in Russia  472
6.6.1. Topic military construction issues and how they can be addressed  474
6.6.2. Military recruitment policy and procurement  475
6.6.3. Military-technical policy and supplying new weapons to the Russian Armed Forces  477
6.6.4. Military and financial policy  484
6.7. The North Caucasus in 2013: the conflicts are escalating  494
6.7.1. Return to a power model: possible consequences  494
6.7.2. Land conflicts: intensifying the confrontation 499
6.8. Review of Legislation in the Sphere of Tax and Civil Legislation in 2013  504

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