1. Russian Economic Report, No. 28, Autumn 2012 : Reinvigorating the Economy
- Author
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World Bank
- Subjects
MARKET DEVELOPMENTS ,GLOBAL MARKET ,TOTAL DEBT ,PENSION FUNDS ,TRAM ,FOREIGN EXCHANGE RESERVES ,DEPOSIT ,ROAD ,INFLATION ,FISCAL BALANCE ,BOTTLENECKS ,EXTERNALITIES ,FISCAL DEFICIT ,REPO RATE ,PRICE STABILITY ,PRIVATE VEHICLE ,DEBT CAPITAL ,RECESSION ,FEDERAL RESERVE ,ROAD INFRASTRUCTURE ,DISPOSABLE INCOME ,VEHICLE EMISSIONS ,RETURNS ,CREDIT GROWTH ,PENSION ,EXCHANGE RATE MOVEMENTS ,FINANCIAL MARKET ,NON-PERFORMING LOANS ,PUBLIC SPENDING ,CAR OWNERSHIP GROWTH ,TRAFFIC ACCIDENTS ,GOVERNMENT BUDGET ,PEAK HOURS ,EMERGING MARKETS ,MORTGAGE ,REPO ,PRIVATE VEHICLES ,PENSIONS ,SHORT-TERM DEBT ,EMERGING ECONOMIES ,CREDIT DEFAULT SWAP ,LIQUIDITY POSITION ,SOVEREIGN DEBT ,BORROWING CAPACITY ,CITY TRAFFIC ,AUCTION ,FEDERAL RESERVE BANK ,GLOBAL ECONOMY ,PURCHASING POWER ,FARES ,MARKET CONFIDENCE ,FUEL CONSUMPTION ,TRANSPORT INFRASTRUCTURE ,BASIS POINTS ,RAIL ,BUDGET SURPLUS ,MONETARY POLICY ,MOTOR VEHICLES ,LIQUIDITY ,CREDIT EXPANSION ,POVERTY REDUCTION ,PUBLIC DEBT ,PRIVATE TRANSPORT ,TRUE ,RAIL TRANSPORT ,URBAN TRANSPORTATION ,INTEREST PAYMENTS ,PRICE CHANGES ,PUBLIC TRANSPORT VEHICLES ,BUDGET DEFICIT ,FIXED CAPITAL ,WEALTH ,BUS OPERATORS ,FINANCIAL SUSTAINABILITY ,TRAFFIC SPEEDS ,TRADE BALANCE ,PORTFOLIO ,ROADS ,ENERGY CONSUMPTION ,MARKET PARTICIPANTS ,AIR ,OIL RESERVE ,REGULATORY FRAMEWORK ,FISCAL POLICY ,AIR POLLUTION ,PUBLIC TRANSPORT SYSTEM ,CRUDE OIL PRICE ,CURRENCY ,ECONOMIC POLICIES ,BOND ,PUBLIC TRANSPORT ,PRIVATE CREDIT ,CAPITAL ACCOUNT ,TRANSPORTATION PLANNING ,DOMESTIC DEMAND ,FOREIGN EXCHANGE MARKET ,INCOME LEVEL ,BALANCE OF PAYMENT ,LOAN ,NATURAL DISASTER ,DEVELOPING COUNTRIES ,UNEMPLOYMENT RATES ,JUDICIAL SYSTEM ,BUS FLEET ,CREDIT QUALITY ,FINANCIAL PERFORMANCE ,TRADING ,PUBLIC TRANSPORTATION ,CARBON MONOXIDE ,INCOME GROWTH ,RESERVE FUND ,ECONOMIES OF SCALE ,PENSION SYSTEM ,PUBLIC INVESTMENT ,TRAFFIC CONGESTION ,LOCAL CURRENCY ,MARKET ECONOMY ,MONEY MARKET RATES ,ROAD TRANSPORT ,FLEXIBLE EXCHANGE RATE ,PASSENGERS ,CAPITAL FLOWS ,INVESTMENT INCOME ,GOVERNMENT DEBT ,BANKING UNION ,DRIVERS ,PUBLIC TRANSPORT MODES ,POPULATION GROWTH ,BANK LENDING ,VEHICLE FLEET ,INSTRUMENT ,FINANCIAL CRISIS ,CAR ,SOVEREIGN BONDS ,CITY STREETS ,PRIVATE CAR OWNERSHIP ,FEDERAL BUDGET ,LACK OF COLLATERAL ,PRIVATE CAR FLEET ,CAPITAL INVESTMENT ,FLEET REPLACEMENT ,INVENTORIES ,TRANSPORTATION SYSTEMS ,EXPORTERS ,ATMOSPHERIC EMISSIONS ,TRAFFIC CONGESTION PROBLEMS ,ROAD SAFETY ,EXTERNAL DEBT ,TROLLEYBUSES ,FUTURES ,LABOR MARKET ,INTERSECTIONS ,ROAD NETWORK ,TRAFFIC MANAGEMENT ,BANKING SECTOR ,EMISSION STANDARDS ,PEDESTRIANS ,CAPITAL ADEQUACY ,HIGHWAYS ,CENTRAL BANK ,LONG-TERM DEBT ,TRANSPORT NETWORK ,CAPITAL OUTFLOWS ,FARE REVENUES ,INVESTMENT CLIMATE ,FUEL ,CDS ,BRIDGE ,CREDIBILITY ,DEBT REPAYMENTS ,MONEY SUPPLY ,FOREIGN EXCHANGE ,ROAD CAPACITY ,PRIVATE BANKS ,ROUTE ,BUS OPERATION ,LIMITED LIABILITY ,OIL MARKET ,ROAD SECTOR ,ACCOUNTING ,CREDIT DEFAULT ,GLOBAL TRADE ,STRUCTURAL PROBLEMS ,REMITTANCES ,TRAFFIC FLOWS ,DEBT STOCK ,LOCAL GOVERNMENTS ,OIL PRICES ,RESERVE ,PRIVATE INVESTORS ,FLEETS ,PUBLIC TRANSPORT SERVICES ,ECONOMIC DEVELOPMENTS ,CURRENT ACCOUNT ,MARKET CONDITIONS ,FINANCIAL INSTITUTION ,ROAD CONGESTION ,GASOLINE ,TRAFFIC ,EXPENDITURES ,ROAD SYSTEM ,CURRENT ACCOUNT SURPLUS ,MACROECONOMIC POLICY ,CONSUMER CREDIT ,BUS ,MONEY MARKET ,ROAD TRAFFIC ,RATES OF RETURN ,INFLATIONARY EXPECTATIONS ,URBAN TRANSPORT ,LEGAL FRAMEWORK ,FIXED INVESTMENT ,CAPITAL INFLOWS ,GROUP LENDING ,LIQUID ASSETS ,CURRENT ACCOUNT DEFICIT ,INTEREST RATE ,CAR OWNERSHIP ,EMISSION ,EXPENDITURE - Abstract
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.
- Published
- 2012