Russia’s export down by 47% to $ 57 bln in Jan-Mar 2009

[The Dane]

MOSCOW, May 6 (Itar-Tass) -- Russia’s exports decreased by 47.6 percent in the first three months of the year as compared to the same period in 2008 and reached 56.9 billion U.S. dollars, the Prime Tass economic news agency said on Wednesday, quoting a report of the Russian Federal Customs Service.

In January-March 2009, Russia’s exports to former Soviet republics dropped by 46 percent, as compared to the same months of 2008, and made up 8.6 billion U.S. dollars, Prime Tass said.

The country’s exports to the rest of the world decreased by 47.9 percent to 48.3 billion U.S. dollars, Prime Tass cited the report.

According to the Federal Customs Service, the decline in Russia’s exports in the first three months in monetary terms was caused by a drop in prices and a reduced volume of imported and exported goods, Prime Tass said.

http://www.itar-tass.com/eng/level2.html?NewsID=13912822&PageNum=0

Wow... :|

[eskachig]

Damn, not a good trend, hopefully it can be reversed.

[JJC]

Aside natural gas, oil, and weapons sales, what does Russia export these days? 47% sounds like a serious crisis if their economy depends heavily on exports.

[The Dane]

Yeah, that's a really big cut.. more than 40 billion US$!

[The Dane]

Aside natural gas, oil, and weapons sales, what does Russia export these days? 47% sounds like a serious crisis if their economy depends heavily on exports.

They do depend alot on exports.

[Shurik SST]

Is this the best you can do?

The same period was anomalous as the now famous oil price spike of 2008 reached its peak at that time.

http://en.wikipedia.org/wiki/File:Brent_Spot_monthly.svg

Of course everything will look like a fall compared to that time. If the trend is now about 60 billion in 3 months, it was about 100 billion in 3 months which would mean a pace of almost half a trillion dollars in exports which would be truly extraordinary.

Nothing to see here.

[lauris71]

Russian exports (mostly energy and metals) are relatively small part of its GDP (ca 25% AFAIK) but unproportionally big part of government revenues. So the immediate consequence will be serious budget deficit in coming years.
Fortunately they did run huge budget surpluses previous years, so they do not have to borrow in 2009-2010 (yet).

[void]

Compared to some certain countries, Russia was quite smart in their behaviour. During boom times, they saved money (like you should), so that during bust times you can use the savings to make life easier. What will happen is that instead of using oil money/exports to finance the gov. budget, the reserve fund will be used. Hopefully things will turn around before that starts to run too low.

[sup_tech]

Mind your own business, sir.

[Flagg]

Russia will certainly be hurting for tax revenue in the short-to-medium term.

Once inflation kicks in...and there are signs it is re-igniting....Russia's commodity based revenues will increase....

[asch]

we have a ridiculous custom taxes from a beginning of 2009 on most of them natural exports. no sence in exporting stuff now. wood, metals export is dying off here.

[TR1]

we have a ridiculous custom taxes from a beginning of 2009 on most of them natural exports. no sence in exporting stuff now. wood, metals export is dying off here.
Who would have thought :|

[wholagun]

Does Russia have a lot of old growth trees around still? In Canada logging got rid of most and the majority now are only found in national/provincial Parks.

[Herman the II]

Russian exports (mostly energy and metals) are relatively small part of its GDP (ca 25% AFAIK) but unproportionally big part of government revenues. So the immediate consequence will be serious budget deficit in coming years.
Fortunately they did run huge budget surpluses previous years, so they do not have to borrow in 2009-2010 (yet).

I believe you are mistaken, they will have to borrow money this year.


World Bank May Lend Russia ‘Several Billions’ of Dollars

Russian officials told the World Bank during meetings in Washington last month that “they want to borrow again,” Rohland said. The country may seek loans from the lender to cover the expected budget shortfall of at least 3 percent in the next three years, Finance Minister Alexei Kudrin (http://search.bloomberg.com/search?q=Alexei+Kudrin&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said.

The world’s biggest energy exporter is sliding into a recession as slumping prices for its oil and gas lead to its first deficit in a decade. The budget gap may be wider than the official estimate of 7.4 percent of gross domestic product, Kudrin said on April 24.


http://www.bloomberg.com/apps/news?pid=20601087&sid=aRjkrBvjlxJ0&refer=home

[void]

They are borrowing money not because they have to (they still have a fair chunk of the reserve fund left), but because it makes more sense. Interest rates at the moment are ridiculously low, so it makes sense to borrow now rather than using up the last of the reserves. Interest rates will only go up, so borrow now and when the rates rise, thats when you use the reserves, rather than using reserves now and borrowing later when interest rates rise.

[Flamming_Python]

I believe you are mistaken, they will have to borrow money this year.



http://www.bloomberg.com/apps/news?pid=20601087&sid=aRjkrBvjlxJ0&refer=home

There are about $190 billion of reserves left and the rate of the decrease of the reserves is levelling off, so as Void pointed out Russia doesn't actually 'have' to do anything. However; keeping the reserves makes by far the most sense; what if a secound stage of the crisis hits? What if the budget deficit is higher than expected? Russia is setting harsh terms for lending even to close Russian allies; perhaps an unwise choice politically but a sound choice economically.


Yeah, that's a really big cut.. more than 40 billion US$!

This figure of +$40 billion or -47% if you will is very deceptive. A very big proportion of Russian exports is Oil; which fell in price from somewhere around +$130 per barrel to $40-50 per barrel. If you look at nations to which the primary Russian export is petroleum products, you will see that most of the exports to that nation has simply 'vanished' due to that reason. In actual fact the volume of Russian exports hasn't changed all that much; rather it is just the price and value of them.

Of course other Russian exports such as different natural resources, processed goods, machinery, etc... have also suffered but by nowhere near such dramatic amounts.

[Herman the II]

Its expected that the reserve fund is gone sometime next year, that's why they start borrowing money. With a credit rating as bad as the one of Russia you don't borrow money if you don't have to.



Russia will run a budget deficit in 2009 that could total as much as 10 percent of GDP.. The 2009 and 2010 budget deficits are expected to wipe out Russia's $121 billion rainy day Reserve Fund by the end of next year.http://www.forbes.com/feeds/afx/2009/05/04/afx6371919.html

Kurdin has said himself that it wont be that easy for Russia to find money on the international market at acceptable prices and that's why they start early and with lower volumes. They know that the fund is running empty and so they start borrowing, they don't "safe" the fund for harsher times.


We need to look at the possibility of entering the external market already in 2010 and to hold a roadshow this year… which will allow international investors to get better acquainted with our aims and plans,” the ******* news agency quoted Kudrin as saying at a ministry meeting. According to the head of the ministry’s debt department,



“The important issue here is not so much to receive funds to cover the budget deficit but to create a benchmark for corporate borrowers... We definitely need to start with small volumes.”


http://www.mosnews.com/money/2009/04/15/borrowabroad/

[kosse]

we have a ridiculous custom taxes from a beginning of 2009 on most of them natural exports. no sence in exporting stuff now. wood, metals export is dying off here.

In addition it is causing ten of thousands of people becoming jobless only in the vicinity of Finland who were working to get the wood out of the forests to Finnish paper plants. Russian forest industry is going to hurt like hell or propably nearly cease to exist until new plants are built inside Russia (if ever). Apparently it's easier to get access to raw materials in Asia and South America since that's where the Finnish paper giants have been investing in.

[kosse]

Another interesting thing is how imports into Russia are also slowing down considerably but I guess that's the case everywhere. There are propably tens of thousands cars sitting in Finnish ports and holding areas that were supposed to go to Russia but now they are being sent to other European countries since the Russian demand is pretty much dead.

But I guess it's good news for Lada factory if Russians can't afford Mercedes and BMW anymore! p-)

[Mousepad]

Well, I say good fecking news, i hope oil will stay at present 40-50 so our brass would move their ass, and not, as usual, sit back and watch as easy money stream in budgets piggy bank, or oligarchs screwing in Alps, or buying BB-grade yachts. In those 5 months alone i (as a small business) saw more smart moves by our govt than whole 8 previous years. Big surprise, our cabrones realised, that small business in other countries makes about 50-70% of GDP not 15% like in Russia, but damn those 15 are tough, to survive in our bureaucratic heaven, but fresh air is here already, and personally i can see changes for good as we speak. So all in all, in general, this Crisis kinda helping, anyway it can't be worse than 90-s :cantbeli:

[Flamming_Python]

Its expected that the reserve fund is gone sometime next year, that's why they start borrowing money. With a credit rating as bad as the one of Russia you don't borrow money if you don't have to.

http://www.forbes.com/feeds/afx/2009/05/04/afx6371919.html

Kurdin has said himself that it wont be that easy for Russia to find money on the international market at acceptable prices and that's why they start early and with lower volumes. They know that the fund is running empty and so they start borrowing, they don't "safe" the fund for harsher times.



http://www.mosnews.com/money/2009/04/15/borrowabroad/

Since when has Russia got a bad credit rating? I'm sure that if anything it has an excellent credit rating because last time it paid off all of its foreign debts well ahead of schedule and in full.

The Reserve Fund emptying is probably a worst case scenario. Admittedly much depends on the price of oil which has a good chance of coming back up a notch or two; but then again perhaps not. The Russian finance and economic ministries are well known for their caution and preparations for a 'worst case scenario'. I suspect that in all likelihood the reserve fund will not be gone by next year; for it has decreased only by a very small amount over the last 2-3 months, indicating that the situation is stabilising. Furthermore, there are signs that the Russian economy is past the worst and is reviving again; this includes the stock market which some investors are already pegging as a potential performer for this year given the severely under-valued assets.

You my friend, are simply full of **** p-)


In addition it is causing ten of thousands of people becoming jobless only in the vicinity of Finland who were working to get the wood out of the forests to Finnish paper plants. Russian forest industry is going to hurt like hell or propably nearly cease to exist until new plants are built inside Russia (if ever). Apparently it's easier to get access to raw materials in Asia and South America since that's where the Finnish paper giants have been investing in.

Russia's priority is Russian jobs, not Finnish jobs. For the existing Finnish wood-working industry; of course they have to get their raw material from somewhere, and now that Russian timber has raised in price so much due to government controls, Finnish business have no choice but to get it from further afield.

However for the most part Finnish investment into the Russian wood processing industry is still surging forward; it is after-all a long-term investment in which returns would only start to be made well after the crisis subsides in any case. There were some pull-outs due to lack of liquidity or uncertainty, but the majority have stayed and a considerable amount of Finnish majors are investing in Russia, exactly to build processing industries for wood products such as pulp, paper, cardboard, etc... The reason is that Russia raised the tariffs on raw wood & timber exports in the hope that it would encourage international investors to invest into the wood processing industry in Russia. And guess what? It worked. Unfortunately due to this move Finnish industries suffered massively and in this sense it was definitely the wrong thing to do; the Finns should have been consulted properly and offered some concessions or good terms. However considering how many times Finland and Russia have met over this issue, I wouldn't be surprised if there was such an agreement hammered out in the end.

Finally, much more significant than either Finnish timber purchases or Finnish investment into the Russian wood processing industry, is the Chinese equivalent of these activities. The Chinese are still investing massively into timber production in Siberia and the Russian Far East, and AFAIK they are also buying timber despite the tariffs.


Another interesting thing is how imports into Russia are also slowing down considerably but I guess that's the case everywhere. There are propably tens of thousands cars sitting in Finnish ports and holding areas that were supposed to go to Russia but now they are being sent to other European countries since the Russian demand is pretty much dead.

But I guess it's good news for Lada factory if Russians can't afford Mercedes and BMW anymore! p-)

Yeap this is a big problem. The way you make it sound though, is as if the European demand is not suffering at all; which I'm pretty sure is just another manifestation of you trolling. Russian demand is very far from 'dead', there is still a huge demand just not as large as before. And yes people are starting to focus more on cheaper, crappier, domestic models, so I guess it would be good news for the Lada factory; perhaps they can finally knock some heads together and produce something descent during this window of opportunity.

I've pointed out this site again and again; but it really is IMHO the premier site for finding Russian investment and industrial expansion news in the Russian regions:

http://www.marchmontcapital.com/

[Herman the II]

Since when has Russia got a bad credit rating?

:lol:

Russia's Credit Rating Loweredhttp://www.newser.com/story/44838/russias-credit-rating-lowered.html


The Russian economy, already pummelled by falling oil prices, trade disputes with neighbours and fleeing investors, took another step towards the abyss yesterday as the country's credit rating was downgraded. Russia is the first G8 nation to have suffered a downgrade since the start of the global financial crisis.http://www.independent.co.uk/news/world/europe/now-russia-gets-caught-in-the-credit-crunch-1546387.html



Russia's long-term sovereign credit rating outlook was lowered to negative by Standard & Poor’s Ratings Services because the cost of the government's “bank rescue operation” may increase.
http://www.business-standard.com/india/storypage.php?autono=338292

You obviously have no idea, just use google next time....






The Reserve Fund emptying is probably a worst case scenario. Admittedly much depends on the price of oil which has a good chance of coming back up a notch or two; but then again perhaps not. The Russian finance and economic ministries are well known for their caution and preparations for a 'worst case scenario'. I suspect that in all likelihood the reserve fund will not be gone by next year; for it has decreased only by a very small amount over the last 2-3 months, indicating that the situation is stabilising. Furthermore, there are signs that the Russian economy is past the worst and is reviving again; this includes the stock market which some investors are already pegging as a potential performer for this year given the severely under-valued assets.

The Russians funds are running empty within the next year or so, that's why they start borrowing money. The Russian government knows it and is acting accordently, if you want to believe otherwise its fine for me...



You my friend, are simply full of **** p-)


Russia strong!! etc...:roll:

[Flamming_Python]

:lol:
http://www.newser.com/story/44838/russias-credit-rating-lowered.html

http://www.independent.co.uk/news/world/europe/now-russia-gets-caught-in-the-credit-crunch-1546387.html

http://www.business-standard.com/india/storypage.php?autono=338292

You obviously have no idea, just use google next time....

The Russians funds are running empty within the next year or so, that's why they start borrowing money. The Russian government knows it and is acting accordently, if you want to believe otherwise its fie n for me...

Russia strong!! etc...:roll:

No it's not; what you write is complete BS and alarmism. I mean gosh, The Independent? When was the last time a British source wrote anything positive about Russia? Or for that matter any Western media?

The guys who are writing articles about the Russian economy collapsing are the same guys who are writing article about how all the Russians will die out in a couple of generations time, the Chinese are overrunning Russia, the Muslims are overrunning Russia, and about how Russia is going to be too weak to matter in a few decades time and would need Western/NATO armies present on its territory to hold it all together. But people are not panicking this time 'round. This is not 1991, nor is it 1999. This is a fundamentally different time with a fundamentally stronger Russia; and no-one is afraid of the economy imploding.

I gave you facts. Such as the fact that over the last couple of months the reserves have only dropped by a very small amount (forget how much). Now familiar as I am with the limitations of using linear extrapolation as a means to determine the future; I would hasten a guess that if the reserves decreased by X amount in the first stages of the crisis, then after a few months were decreasing by a factor of X/2, and are now decreasing by the equivalent of X/3, it doesn't take a genius to predict that the decrease is levelling off and should all in all likelihood stabilise around about $160-170 billion; that the Reserve funds are not 'rapidly running out', and that there must be another reason why the country is borrowing money.

[Russian_dude]

Oil prices are going up and even today they are pretty high.

[Herman the II]

No it's not; what you write is complete BS and alarmism. I mean gosh, The Independent? When was the last time a British source wrote anything positive about Russia? Or for that matter any Western media?

What BS? Russia's credit rating is a lousy "BBB" that's a goddamn fact, that has nothing to do with the western media. I gave you several sources, if you have one saying that Russia actually has a good credit rating do post it. :roll:


The rest of your post is just the usual "Russia strong" ranting, believe what you want.
At the beginning of the crisis all the Russians shouted: we have a solid growth and the reserve fund, Russia will handle the crisis much better than the rest.
In reality the Russian GDP shrank by 10 % at the beginning of this year and the exports by 50% and the government starts borrowing money because they know their reserves will run empty. By now Russia is one of the countries that got hit the hardest by the economic crisis and with such an delusional attitude as yours it wont change anytime soon...

[TheArmenian]

What BS? Russia's credit rating is a lousy "BBB" that's a goddamn fact, that has nothing to do with the western media. I gave you several sources, if you have one saying that Russia actually has a good credit rating do post it. :roll:


The rest of your post is just the usual "Russia strong" ranting, believe what you want.
At the beginning of the crisis all the Russians shouted: we have a solid growth and the reserve fund, Russia will handle the crisis much better than the rest.
In reality the Russian GDP shrank by 10 % at the beginning of this year and the exports by 50% and the government starts borrowing money because they know their reserves will run empty. By now Russia is one of the countries that got hit the hardest by the economic crisis and with such an delusional attitude as yours it wont change anytime soon...

The only person who has bad credit (credibility) is you.

The 10% figure is for the early part of the year. Things are already getting better. This is what The EU believes in now: 3.8% only. Much better than the the EU's shrinkage of GDP and much better than your own country's which is expected to be 6.1%.

European Commission sees Russian economy contracting 3.8% in ‘09 (http://www.prime-tass.com/news/show.asp?topicid=0&id=456777)

Source : primetass.com 06.05.2009

(you need to have an account to open the above link)

Sorry to make it rain on your fantasy world of Russophobic wishfull thinking.

[Herman the II]

The only person who has bad credit (credibility) is you.

The 10% figure is for the early part of the year.



I wrote:



In reality the Russian GDP shrank by 10 % at the beginning of this year

What do you want? What I wrote is true....:roll:

[The Dane]

The only person who has bad credit (credibility) is you.


STFU :bash: What the fvck is it with you Russian fanboys and person attacks on members?

[TheArmenian]

STFU :bash: What the fvck is it with you Russian fanboys and person attacks on members?

What's the matter with you. Can't stand the truth?

:bash:

[The Dane]

What's the matter with you. Can't stand the truth?

:bash:

What the hell are you talking about.. What truth ??? I'm talking about needless idiotic comments about other members.. So please enligthen us or crawl back to your cave.. jeez :roll:

[Flamming_Python]

What BS? Russia's credit rating is a lousy "BBB" that's a goddamn fact, that has nothing to do with the western media. I gave you several sources, if you have one saying that Russia actually has a good credit rating do post it. :roll:


The rest of your post is just the usual "Russia strong" ranting, believe what you want.
At the beginning of the crisis all the Russians shouted: we have a solid growth and the reserve fund, Russia will handle the crisis much better than the rest.
In reality the Russian GDP shrank by 10 % at the beginning of this year and the exports by 50% and the government starts borrowing money because they know their reserves will run empty. By now Russia is one of the countries that got hit the hardest by the economic crisis and with such an delusional attitude as yours it wont change anytime soon...

Most of your post is the usual "Russia weak" ranting, believe what you want. But for the benefit of everyone else here; I will reply. I have already explained the reasons behind the exports 'shrinking' by 50%. Suffice to say, just as easily as they have gone down, they can go back up; it depends on the price of oil; and it is nowhere near the catastrophic situation that you paint it.

In order for Russia not to run a budget deficit; the oil price has to go up to at least $60-65 a barrel, which is not a figure that is to far away, and current trends show that the price of oil has a good chance of increasing to this level within the next 6-12 months. Russian officials have been saying for years that prices higher than $90-100 are dangerous and could mean a future collapse which wouldn't be beneficial for Russia, and they expect that the neutral price of oil at equilibrium would be somewhere between $70-80. Now it looks as if they were right, the bubble has burst and the price of oil is finally stabilising towards its true value.

Now of course trends change, I'm not denying, but again current trends show that the reserves are not decreasing by nearly as much as they were at the beginning of the crisis. Make of it what you will; but I doubt that under any conditions other than a second crash, will Russia actually run out of reserves, and to date you have completely ignored this argument of mine and have instead resorted to repeating the same drivel. Why would Russia run out of reserve funds in a years time, if the current level of decrease gives it has enough funds for 5 years? Why are you so sure? Have you actually checked the figures or just read Western media alarmism that is determined to prove that Russia is dying, crashing and can't possibly create a successful model of development for itself without the help of the enlightened West? Russia is the biggest threat to the West in the world in terms of the sort of example that it can set for other countries if it succeeds on its independent course; so I would suggest that you give these articles a second look with this argument in mind.

The Russian GDP shrank by so much because so many investors pulled their money out, and because the price of oil deflated so rapidly. Fortunately, with these types of problems, they can just as quickly be fixed as they were damaged; provided of course the conditions are right.

Now of course there are other problems; auto industry, other natural resources having gone down in price, real estate market going down, construction halting, consumption decreased and retail is hurting. However these problems are no higher than in other countries, and in most cases better. Construction is still continuing for many projects, the real estate market hasn't as much crashed as in other countries as it has enterred a period of decline; there are still massive amounts of infastructure projects on the way which give plenty of work to Russian labourers and specialists, long-term investment into factories, production, agriculture, some of which have been cancelled or had problems with funding but the majority of which is still going as planned. Russia's government still has money to bail out the auto industry, other sectors of the economy, provide aid and social benefits to increasing amounts of unemployed.

There are countries with far worse conditions than this and will have an increeasing amount of problems over the next 12 months, despite the fact that on paper they did not have nearly the amount of 'GDP decline' and 'Oh-no we're gonna die' because oil prices crashed back down to Earth.

[kosse]

Russia's priority is Russian jobs, not Finnish jobs. For the existing Finnish wood-working industry; of course they have to get their raw material from somewhere, and now that Russian timber has raised in price so much due to government controls, Finnish business have no choice but to get it from further afield.

However for the most part Finnish investment into the Russian wood processing industry is still surging forward; it is after-all a long-term investment in which returns would only start to be made well after the crisis subsides in any case. There were some pull-outs due to lack of liquidity or uncertainty, but the majority have stayed and a considerable amount of Finnish majors are investing in Russia, exactly to build processing industries for wood products such as pulp, paper, cardboard, etc... The reason is that Russia raised the tariffs on raw wood & timber exports in the hope that it would encourage international investors to invest into the wood processing industry in Russia. And guess what? It worked. Unfortunately due to this move Finnish industries suffered massively and in this sense it was definitely the wrong thing to do; the Finns should have been consulted properly and offered some concessions or good terms. However considering how many times Finland and Russia have met over this issue, I wouldn't be surprised if there was such an agreement hammered out in the end.

Well, it remains to be seen how it turns out. Domestic labor unions have also played a major part in strangling Finnish paper industry with ridiculous salary demans so the blame does not lie solely on Russians.

In my opinion rising the tariffs so quickly so high is still a bad choice by Russians because a lot of people lost their jobs in Russia because of that (a lot more than in Finland). It propably doesn't make loggers and forestry workers very happy that in 5-10 years there will be jobs again after the Finnish forestry giants have relocated there (if they even relocate there in sufficient numbers to replace the lost jobs, one or two factories are not going to cut it). Especially Russian Karelia which is already poor is hit hard. I think it might be even unhealthy to flaunt with tariffs around there (:)). I also have a feeling that Russia might reconsider the tariffs if financial crisis doesn't end soon.


Finally, much more significant than either Finnish timber purchases or Finnish investment into the Russian wood processing industry, is the Chinese equivalent of these activities. The Chinese are still investing massively into timber production in Siberia and the Russian Far East, and AFAIK they are also buying timber despite the tariffs.I have a hard time believing that Chinese would buy raw timber if the tariffs are the same as on the Finnish border. Because:

-1 cubic metre of timber harvested from Finnish forests costs about 40 euros
-Russian tariff ALONE is 50 euros (!!) per cubic metre

This effectively stops all raw timber imports from Russia. And I doubt timber in Chinese forests (if they have any left) is much more expensive than in Finnish forests. If it is manufacturing anything from it simply isn't financially feasible because cheaper products are always available (those made of non-Russian or non-Chinese timber). Also, there is 0 big Chinese pulp or paper companies so I doubt it's actually the Chinese who are investing..there's no way the biggest pulp and paper companies in the world let Chinese take over their markets like that. If it's feasible corporations like Stora-Enso are there.






Yeap this is a big problem. The way you make it sound though, is as if the European demand is not suffering at all; which I'm pretty sure is just another manifestation of you trolling.I suggest you read the first line of the reply you answered to again. There's still a lot bigger market in Europe and the cars are naturally sent there to be sold (even if they don't sell well).

[Herman the II]

Most of your post is the usual "Russia weak" ranting, believe what you want. But for the benefit of everyone else here; I will reply.

So you now agree that Russia has a bad credit rating?
Or will you give me a source that claims otherwise like you said?
Still waiting, as you said my claim was bogus.

[zg18]

If you want to portray Russia as banana economy ,make shure you handle most of the data and facts , like Bismarck said "Russia is neither weak as it seems or strong as it seems" ,that works for Russian economy also.

[void]

There is a certain disparity between credit ratings of countries and reality, this is certain. There has to be some question over the reliability of these rating agencies, considering the great job they did with assigning credit ratings to the various derivative assets which nuked the entire world financial sector over the past year...

Taking a look at the debt levels and trade deficits of countries like the US and UK, one has to wonder why they still have AAA ratings. Many leading economists think at the moment that there is no way the US can repay its debt, which currently stands at around 6 trillion public sector, and 4 trillion in the private sector. The most likely way out is to inflate out of the debt (print money), reducing the real value of the debt and "solving" that problem, but in the process screwing over the lenders and domestic savers. With this in mind, how the US can have a AAA rating is beyond me personally.

[TheArmenian]

I wrote:



What do you want? What I wrote is true....:roll:

In these kind of discussions, you should use only the latest statistics.

Using an old figure to make a claim is misleading and wrong.

A more objective and open-minded state of mind leads to better quality of discussions (that applies both to fanboys as well as to people who suffer from phobias).

[void]

So you now agree that Russia has a bad credit rating?
Or will you give me a source that claims otherwise like you said?
Still waiting, as you said my claim was bogus.

Russia has a bad credit rating according to the rating agencies in question, but in reality Russia has a much higher chance of paying off its debts than many Western countries. The UK for example is well and truly screwed. The US at least has its debt denominated in its own currency, so it can always take the printing press approach to the problem. The UKs debt is mostly denominated in a foreign currency, so the printing press approach is impossible for them, and so they would either have to pay it off properly (welcome to high taxes) or default.

[Herman the II]

In these kind of discussions, you should use only the latest statistics.

Using an old figure to make a claim is misleading and wrong.

A more objective and open-minded state of mind leads to better quality of discussions (that applies both to fanboys as well as to people who suffer from phobias).

The only figure I posted was a fact, Russia's GDP did shrink by 10 % by the beginning of the year. Are you doubting that?
You then posted an inaccesible source that may say that the forcast for the whole year is a -3%. However that is a forecast, here is another one:


It said Russia's economy -- by far the region's biggest -- would shrink by 7.5 percent estimate based on the government's first quarter figures, ..http://www.xe.com/news/2009-05-07%2011:49:00.0/400185.htm?categoryId=1&currentPage=6

Again: What do you want?



Russia has a bad credit rating according to the rating agencies in question, but in reality Russia has a much higher chance of paying off its debts than many Western countries.

Apparently those analysts believe otherwise, that's why Russia has to pay much higher interest rates for borrowed money than the rest. Its a goddamn fact.

[Mr.Woland]

Our GDP would be #1 in the world if fиcking journalists and 'experts', writing BS about Russia, pay $1 dollar to Russia for each sh1tarticle.

[void]

I dont know how to put it, but those analysts are full of ****. These are the same people who thought the housing market would only ever go up and would grow faster than GDP indefinitely (a logical impossibility since then nobody could afford housing). They then thought it was a great idea to bundle up crappy high interest sub-prime mortgages, bundle them up and re-brand them as AAA securities (when in reality they were based on junk). Conveniently, now that they were AAA rated, this meant retirement funds and other such institutions could invest in them (retirement funds and such are only allowd to invest in AAA investments). Only problem was, these were actually junk investments that went bust, oh well, sucks to be ummm... everybody.

But you know, the investment rating agencies know what theyre doing right?

[TheArmenian]

The only figure I posted was a fact, Russia's GDP did shrink by 10 % by the beginning of the year. Are you doubting that?
You then posted an inaccesible source that may say that the forcast for the whole year is a -3%. However that is a forecast, here is another one:
http://www.xe.com/news/2009-05-07%2011:49:00.0/400185.htm?categoryId=1&currentPage=6

Again: What do you want?




Apparently those analysts believe otherwise, that's why Russia has to pay much higher interest rates for borrowed money than the rest. Its a goddamn fact.

In your opinion Russia has bad credit. Believe what you want.

What is then the credit rating of countries like Iceland, Latvia, Ukraine ???

[void]

Our GDP would be #1 in the world if fиcking journalists and 'experts', writing BS about Russia, pay $1 dollar to Russia for each sh1tarticle.

Ummm, no, Russia would NOT have anywhere near the "#1 GDP", way way way too many problems with that statement :)

[Herman the II]

In your opinion Russia has bad credit. Believe what you want.


Wat? I wrote that Russia has a bad credit rating. There is nothing to believe, its a fact.

[Alef]

The real problem of russian economy is laws and corruption. If there aren't this factors - the economy can easily recover from this breakdown.
But there are good and right steps taken by goverment - support of small business.

[TheArmenian]

Wat? I wrote that Russia has a bad credit rating. There is nothing to believe, its a fact.

My bad. I meant credit rating.

But don't duck the issue and answer the question in my earlier post.

[Herman the II]

My bad. I meant credit rating.

But don't duck the issue and answer the question in my earlier post.

No problem.
What question, for the credit rating of Ukraine? Its a "CCC" if I'm not mistaken. How is that relevant? I dont believe Ukraine should be a ideal for Russia.

[void]

Wat? I wrote that Russia has a bad credit rating. There is nothing to believe, its a fact.

Your statement is technically 100% correct. I think that what some are saying is that the bad credit rating is rather undeserved, especially if you look at the financial and debt situation of some countries with a supposedly "AAA" rating.

It is somewhat confusing (and arguably illogical) that a country with the lowest public sector debt of any major country in the entire world, and one of the largest forex reserves has a lower credit rating than a country like the UK.

Lets compare.
UK: Public sector Debt = 50% of GDP
Russia: Public sector Debt = <5% of GDP
UK: GDP by PPP = 2.2trillion
Russia: GDP by PPP = 2.2 trillion
UK: trade balance = -$200billion
Russia: trade balance = +$150 billion

but despite these numbers, Russia has a BBB credit rating or thereabouts, UK has a AAA rating.

[TheArmenian]

No problem.
What question, for the credit rating of Ukraine? Its a "CCC" if I'm not mistaken. How is that relevant? I dont believe Ukraine should be a ideal for Russia.

So, which country do you think is good for comparison purposes?

[Herman the II]

So, which country do you think is good for comparison purposes?

For some reason Russia is member of the G8, so maybe we should compare it with a member of the G8, or any other country with a comparable GDP.
I don't believe any Russian wants to be in the same category as Ukraine when it comes to economic data.



but despite these numbers, Russia has a BBB credit rating or thereabouts, UK has a AAA rating.

That's because the credit rating isn't only evaluated by those three factors you posted above.

[void]

For some reason Russia is member of the G8, so maybe we should compare it with a member of the G8, or any other country with a comparable GDP.
I don't believe any Russian wants to be in the same category as Ukraine when it comes to economic data.



That's because the credit rating isn't only evaluated by those three factors you posted above.

Lets compare to Italy, another member of the G8 (I did the UK above)

Italy public sector debt: 104% of GDP (yikes!)
Italy balance of trade: -$1 billion
Italy GDP by PPP: $1.8 trillion

But yet again Italy has a credit rating of AA

[void]

For some reason Russia is member of the G8, so maybe we should compare it with a member of the G8, or any other country with a comparable GDP.
I don't believe any Russian wants to be in the same category as Ukraine when it comes to economic data.



That's because the credit rating isn't only evaluated by those three factors you posted above.

Credit rating should be based on your ability to pay back the interest and the principal of the loan, which is dependent on your current liabilities and your income. If you have very high current liabilities, you will be hard pressed to pay back any new liabilities, and if you have a low income that also applies.

So what other factors do you think are important. I think you'll say things like "business climate" and such, but all that is just and underlying factor affecting the two things I mentioned above.

[TheArmenian]

For some reason Russia is member of the G8, so maybe we should compare it with a member of the G8, or any other country with a comparable GDP.
I don't believe any Russian wants to be in the same category as Ukraine when it comes to economic data.

Maybe. But that would be simplistic as most of the G8 countries don't have the size and natural resources of Russia. The USA is in a completely different league because of the size of its economy (and its own set of problems). Among the G8 Canada is most similar to Russia (large and lots of resources). I was in Canada recently, and things are not great there either, Canada is also suffering from the low oil prices (among other problems).


I hope things improve everywhere sooner rather than later.

Edit: I just checked the price of a barrel of oil: $58.05 http://www.bloomberg.com/?b=0&Intro=intro3

[Herman the II]

So what other factors do you think are important. I think you'll say things like "business climate" and such, but all that is just and underlying factor affecting the two things I mentioned above.

You can find the factors used for such an evaluation here:
http://www.euromoney.com/poll/10683/PollsAndAwards/Country-Risk.html

(Just an example)

[acosta]

this is true. a friend working in an energy company once joked that too. effiency is the problem, and russian can handle 50$ oil, but bureacracy doesn't.

now oil is tallied in USD, russina kind of in FED's cage.


The real problem of russian economy is laws and corruption. If there aren't this factors - the economy can easily recover from this breakdown.
But there are good and right steps taken by goverment - support of small business.