Publication: Russian Economic Report, November 2005
Loading...
Published
2005-11
ISSN
Date
2021-08-18
Author(s)
Editor(s)
Abstract
Growth in Russia received a boost from new increases in oil and gas prices, and from the rapid expansion of domestic demand. Income and wage growth continues to outstrip the expansion of GDP, and the retail trade boom shows no signs of abating. But the slowdown in many sectors of the economy since the second half of 2004 remains visible, and 2005 has brought even stronger evidence that this slowdown is related to increasing competitive pressures from the rapid real appreciation of the ruble. Much of the recent growth in Russia appears to be concentrated in non-tradable sectors. Record high record high oil prices once again widened considerably Russia's trade, current account, and balance of payments surpluses. Higher inflation in 2005 than in 2004 is due in large part to increases in administered utilities prices early in the year. The primary source of inflationary pressures in Russia remains the huge balance of payments surplus. As oil prices grow, so do the potential pressures for inflation or nominal currency appreciation. The Stabilization Fund continues to be far and away the most important economic policy instrument for limiting these pressures. Monetary policy in Russia continues to revolve around managing the nominal exchange rate. The Central Bank has announced its intention to introduce gradually more exchange rate flexibility over the medium term. Exceptionally high world oil prices once again brought higher than expected revenues to the federal government in 2005, generating a budgetary surplus of an estimated 1.17 billion rubles (cash basis), or 8.9 percent of GDP, in the first eight months of the year. Aggregate social indicators continue to show signs of progress. Growth in real wages may have slowed from the double digit annual expansion of the previous five years but wages are still growing faster than the economy as a whole. Real disposable income of the population also increased by an estimated 9.3 percent in the first nine months of 2005 relative to the same period of 2004 and the rate of unemployment in the Russian economy is still declining .
Link to Data Set
Citation
“World Bank. 2005. Russian Economic Report, November 2005. © World Bank. http://hdl.handle.net/10986/36157 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication South East Europe Regular Economic Report, November 2011(World Bank, Washington, DC, 2011-11-15)The recovery of global growth that started in 2010 began to weaken in 2011. During the first half the falloff was linked to the Tohoku nuclear disaster in Japan and high oil prices, but by the end of July, temporary effects from Tohoku were starting to fade and global industrial production was rising. However, since August the global economy has come under increasing stress from the sovereign debt problems in Europe, anemic growth in the US, and a slowdown in China and other main emerging markets. The latest leading indicators and forecasts point to a further slowdown in growth in Europe. Meanwhile, risks remain of a double-dip recession in the US and sharper slowdown in the large emerging economies. Near term developments depend critically on factors that are largely beyond the control of governments. As this is being written, leaders of the major European Union (EU) countries are still seeking to implement a set of credible policies to establish an orderly process for managing sovereign debt in Greece, to prevent risks from spreading to other economies in the euro zone, to recapitalize banks affected by likely sovereign debt write downs, and to establish a more unified and effective fiscal framework for euro zone (EZ) states. Uncertainty over their ability to successfully conclude this process, as well a series of ratings downgrades, stock market volatility and uncertainty over US deficit policies have shaken investor and business confidence and kept consumers wary. Most forecasters have already reduced their projections for global growth in the US and the EU by a percent or more.Publication Russian Economic Report, No. 22, June 2010(Washington, DC, 2010-06-16)Amid heightened global uncertainties, Russia is experiencing a bumpy recovery. Domestic demand is rising, but unemployment remains high, and credit and investment remain limited. The budget has benefited from higher oil prices, but fiscal consolidation remains important in the medium term. Crumbling infrastructure, especially in transport, could hamper the economy's competitiveness and longer-term growth prospects. The debt crisis in Western Europe sharpens the downside risks to global recovery and oil prices. But the effects on Russia are likely to be blunted by its stronger fiscal and debt positions and by limited trade and financial links with the affected countries. Russia is likely to grow by 4.5 percent in 2010, followed by 4.8 percent in 2011, as domestic demand expands in line with gradual improvements in the labor and credit markets. Employment is expected to improve gradually, however, enabling some further reductions in poverty.Publication Russian Economic Report, April 2015(Washington, DC, 2015-04)Russia's economy experienced two shocks in 2014. On top of the structural crisis that began in 2012, Russia had to deal with cyclical and idiosyncratic challenges to the economy. One of the new shocks illustrates Russia s integration into the world economy through its natural resource exports, and thus its dependence on the global commodity cycle: oil prices more than halved between July and December 2014, giving Russia a terms-of-trade shock. The ruble lost 46 percent of its value against the US dollar, which worsened already eroded business and consumer confidence. The monetary tightening in response made credit expensive, further dampening domestic demand. The other, more idiosyncratic, shock was related to the geopolitical tensions that began in March 2014 and led to economic sanctions. The tensions not only heightened perceptions that Russian investments had become riskier, they also dramatically increased the costs of external borrowing for Russian banks and firms. Spreads on Russian credit default swaps peaked in December at 578 basis points, compared to 159 a year ago. Together with the financial sanctions imposed on Russia in late July, which have restricted the access of Russia s largest state-connected banks and firms to Western international finance markets, this all but extinguished investment. The current World Bank baseline outlook, however, sees the national poverty rate increasing from 10.8 percent in 2013 to 14.2 percent in 2015 and 2016. Poverty is expected to increase because real disposable income and consumption will decline. This would be the first significant increase in poverty rates since the 1998-1999 crises. Russia weathered the 2008- 2009 crisis well as disposable incomes continued to grow slightly. Given the current limited fiscal space, additional support for the poor and vulnerable is likely to be less generous than it was during the 2008-2009 crisis. Although people at the bottom of the income distribution are the most vulnerable, there will be less opportunity for an increase in shared prosperity in 2015-2016, and there is a worrisome possibility that recent achievements might be reversed.Publication Russian Economic Report, No. 25, June 2011(Washington, DC, 2011-06)Russia has seen even higher oil windfall in the past few months, which translates into likely fiscal surpluses this year and next. The government should not miss the opportunity provided by a large oil windfall to substantially improve its long-term fiscal position, further reduce inflation, and, therefore, ensure a strong basis for durable stability and healthy growth in the future. Rising domestic demand and credit activity are increasingly supporting solid growth. Overall, labor market conditions improved recently while poverty was broadly flat during and after the crisis, but unemployment and poverty in many regions remain difficult. Further reductions in poverty will require greater policy focus and persistence in implementing more effective and targeted programs, especially in the poorest regions. Two new special-topic analyses focus on export diversification in Russia, and food and energy inflation in Europe and Central Asia region. In the first, results show that productivity is the key to exports and that lack of competition and entrepreneurial innovation are relevant obstacles to the emergence of new, potentially exportable products. In the second, it is shown that food and energy prices in Russia and other countries in Europe and Central Asia are contributing significantly to consumer price inflation, complicating anti-inflation policy and poverty reduction.Publication Russian Economic Report, No. 28, Autumn 2012(World Bank, Washington, DC, 2012-10)Early in the year, as the global economy was slowing and the euro area entered a recession, Russia's economy held steady. But now, as 2012 is entering its final quarter, growth is slowing. Just at a time when Russia's output levels have exceeded the pre-crisis peak, the economy is settling onto a lower trajectory, even though oil prices have stayed high. But let us start with the strong points. The economy had a good first half of the year. While growth was stalling in Europe and slowing in other emerging economies, it remained steady in Russia. Key economic indicators were near or at record levels: the current account surplus stayed high and the Central Bank of Russia added to its reserves, helping to bolster market confidence. Capital outflows, long regarded as one of the soft spots of Russia's economy, declined in the second and third quarters of 2012 from the peaks in the previous two quarters. Whereas many countries in Europe are struggling with large public debt and high fiscal deficits, Russia's federal government public debt is close to single digit and the fiscal balance is in surplus. Inflation and unemployment rates declined to their lowest level in two decades. As people's purchasing power improved and more people had jobs, fewer people were in poverty than at any time since the beginning of the economic transition. A challenging external environment and worsening sentiments among businesses and consumers translate into weak growth prospects. Excluding the crisis years of 1998 and 2009, growth in 2012 is set to decline to its lowest rate in a decade and a half. And 2013 is unlikely to look much better. The weak outlook means that strong, three-pronged policy action is essential to reinvigorate the economy. First, economic policies have to ensure stability. The recent tightening in monetary policy was an important step in this direction. Second, Russia has to build buffers against the external volatility. This means replenishing the reserve fund, moving towards inflation targeting and strengthening banking supervision. Finally, the government has to lift the growth potential of the economy. This means raising productivity and competitiveness, diversifying the economy, and improving transport connectivity, as discussed in the last section of this report, in line with its longer-term economic policy goals. Making headway on this agenda will enable Russia to lift growth above 4 percent and more.
Users also downloaded
Showing related downloaded files
Publication Europe and Central Asia Economic Update, May 2017(Washington, D.C., 2017-05-11)Trade played a pivotal role during the transition of many. countries in Europe and Central Asia to market economies. It forced a more efficient use of resourced and supported adoption of new technologies. Going forward, trade will again be crucial as countries adjust to new specialization patterns in the world. The adjustment requires not merely tweaking of trade policies, but rather a rethinking of how labor markets and capital markets are organized.Publication Net Zero Energy by 2060(2024-03-01)Since February 2022, geopolitical events have made clear Europe’s need to diversify its energy sources and avoid excessive dependence on fossil fuel imports. The drop in Russian natural gas flows to Europe in 2022 marked the single largest supply shock in the history of global gas markets. It caused a significant increase in prices of electricity and heating services for consumers across the continent. With Europe’s high reliance on imported natural gas, reestablishing energy security is a paramount objective. But how security can be achieved is subject to many uncertainties. Although Central Asia is not as dependent on gas imports as other parts of the World Bank’s Europe and Central Asia (ECA) region, it has not been spared an energy crisis. Chronic underinvestment and the harshest winter conditions in decades resulted in significant blackouts in power and heating during the winter of 2022/23. This report analyzes the implications of the 2022/2023 energy crises over the short and long term, observing possible energy scenarios through 2060 in the Bank’s ECA region and examining three key questions: • What is the state of energy security in ECA in the wake of recent geopolitical events? • What will it take to decarbonize the ECA energy system? • What are the main uncertainties?Publication Global Monitoring Report 2015/2016(Washington, DC: World Bank, 2016)The Global Monitoring Report 2015/2016, produced by the World Bank Group in partnership with the International Monetary Fund, comes at an inflection point in both the setting of global development goals and the demographic trends affecting those goals. This year marks the end of the Millennium Development Goals (MDGs) and the launching of the Sustainable Development Goals (SDGs), while the World Bank Group has in parallel articulated the twin goals of sustainably ending extreme poverty and sharing prosperity. This report presents the latest global poverty numbers, based on the 2011 purchasing power parity (PPP) data, and examines the pace of development progress through the lens of the evolving global development goals. The special theme of this year’s report examines the complex interaction between demographic change and development. With the number of children approaching a global ceiling of two billion, the world’s population is growing slower. It is also aging faster, with the share of people of working age starting a decline in 2013. But the direction and pace of these trends vary starkly across countries, with sizeable demographic disparities between centers of global poverty (marked by high fertility) and drivers of global growth (marked by rapid aging). These demographic disparities are expected to deeply affect the pursuit of the post-2015 agenda, accentuating existing challenges and creating new opportunities.Publication Europe and Central Asia Economic Update, Fall 2023(Washington, DC: World Bank, 2023-10-05)Europe and Central Asia continues to be negatively impacted by the Russian Federation’s invasion of Ukraine, tighter global financial conditions, persistent inflation, and global economic fragmentation. Economic growth in the region is projected to remain weak relative to the long-term trend, delaying the convergence of living standards to those of high-income countries. The impacts of climate change are becoming a serious constraint on growth, as extreme weather events are affecting the region with increased frequency and severity. Economic growth for the emerging market and developing economies of the Europe and Central Asia region has been revised up to 2.4 percent for 2023. The pickup in growth reflects improved forecasts for Ukraine, Central Asia, Türkiye and Russia. Downside risks cloud the outlook. High inflation may persist amid heightened volatility in global commodity markets and a surge in energy prices. Global financial conditions may tighten further. And global growth, already the weakest on record for any five-year period since 1990, may slow further.Publication Trees, Cities, and a Green Future(Washington, DC: World Bank, 2023-12-01)Urban forestry has evolved into a multifaceted discipline, encompassing far more than aesthetic landscaping. As a cornerstone of environmental stewardship, it includes strategic planning and comprehensive management to optimize the environmental, social, and economic benefits of trees. This involves the conservation of various green spaces—parks, riverbanks, vacant lots— to enhance urban life. It adds economic and property value, creates jobs, and offers costsaving benefits such as reduced infrastructure needs and lower energy costs by providing shade. Social advantages include improved public health through recreational spaces, stress reduction, air pollution reduction, and promotion of physical activity. Additionally, the environmental impacts of urban forestry are profound: mitigating climate change, enhancing air and water quality, reducing erosion, and promoting biodiversity. The World Bank’s series of webinars ‘Trees, Cities, and a Green Future’ were held from January through July 2023 to address the pressing need for awareness, education, and collaborative action in the field of urban tree management; especially considering its multifaceted importance in modern cities and unique relevance in Central Asia. It was cohosted by the World Bank’s Environment, Natural Resources, and Blue Economy and Urban, Resilience, and Land global practices. The series represented a thematic set of learning events curated as an online knowledge exchange platform that aimed to connect policy makers, practitioners, and experts across Central Asia and the globe, all focused on advancing urban forestry and greening best practices for urban land restoration and climate resilience in cities and regional development projects.