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Regional Budgets in 2017

Alexander Deryugin – Senior Research fellow of Budget Policy Department, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration; Research fellow of Budget Policy Department of the Gaidar Institute. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Russia’s regional governments continued to see their budget revenues increase in real terms in 2017. On the other hand, they reined in budget expenditures by entering into individual equalisation transfer agreements and restructuring their debt on federal loans, resulting in lowest possible overall budget deficit. However, a total debt accumulated by regional governments remained high for lower-budget regions.

Key words: regional budgets, regional budget revenues, regional budget expenditures, regions’ public debt, public budget loans and bank loans.

Survey of Current Business (January-April 2018)

Sergey Aukutsionek – Head of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, Candidate of Economic Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Andrey Yegorov – Research fellow of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, Candidate of Economic Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Inessa Bachirova – Senior Research fellow of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Tatyana Serzhantova – Senior Research fellow of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In January 2018, the majority of REB indicators significantly improved. Many of them usually noticeably fall down in the first month of the year (due to long New Year holidays,) but in January 2018 they decreased less dramatically. The diffusion index of output wasn’t so high in January since 2004, and the diffusion index of output and input prices ratio set a record for January for all 26 years of observation. With great optimism REB respondents in January also looked into the future: the three-month expectations of the diffusion index of output increased in comparison with the previous month by 14 points and of wages – by 11 points. The diffusion indices of three-month expectations of financial situation and of the order-book level also showed good growth.

Key words: industry, industrial enterprises, price level, wages, employment, output, investment, indebtedness to banks, order-book level, stocks of finished products, capacity utilization rate, risk of bankruptcy, economic policy, crisis duration.

Labor Market in 2017

Victor Lyashok – Senior Research fellow of the Labor Market and Pension System Research Department, Institute for Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In 2017, the labor market was recovering after the crisis: the rate of unemployment declined and wages increased. Recovery processes were largely facilitated by workforce reduction which began last year.  The first evidence of labor shortages emerged on the labor market which saw full employment for quite a long period of time.

Key words: labor market, employment, unemployment, wages and salaries, the formal sector of the economy and the informal sector of the economy.

Industrial Enterprises in Q1 2017

Sergey Tsukhlo – Head of Business Surveys Department of the Gaidar Institute, Candidate of Economic Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In early 2018, main features of the lingering stagnation inherent from 2015–2016 crisis persisted. The January optimism seemed unstable for enterprises and did not result in projections’ optimism. At the quarter-end, dynamics of major indexes demonstrated validity of pessimism.

Key words: Russian industry, demand, output, employment, stocks of finished goods, crediting of manufacturing, actual trends and expectations.

Demographic Policy Measures: their Efficiency and Preferences of Individuals

Еkaterina Tretyakova – Research fellow of the Demography and Migration Research Department, Institute for Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Ramilya Khasanova – Senior Research fellow of the Demography and Migration Research Department, Institute for Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

As seen from the analysis of the data of the third wave of the Man, Family and Society survey carried out by the Institute for Social Analysis and Forecasting, RANEPA, people rate highly birth-rate promotion measures undertaken by the RF Government from 2007. Most measures which came into effect in January 2018 (extension of the maternity capital program, payments to low-income families with children and provision of easy-term mortgage lending) meet the society’s requests. However, though the maternity capital program is regarded as common good for all, its effect in respondents’ estimates is diminishing when respondents’ personal reproductive plans are concerned.

Key words: demography, maternity capital, birth rate, low-income families and mortgage.

Oil and Gas Sector in 2017

Yury Bobylev Head of Mineral Sector Economics Department of the Gaidar Institute; Leading Research fellow of the Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In 2017, the volumes of crude oil production somewhat fell owing to Russia’s commitments to curb production as a result of the oil output cut agreement between some OPEC and non-OPEC countries. Natural gas production and exports rose. Under the so-called tax maneuver in force in the oil industry, refining depth went up, production and export of fuel oil moved down and export of crude oil increased. The oil and gas sector products still constitute over have of the Russian exports.

Key words: oil, the oil and gas sector, production and export of oil, production and export of natural gas, tax maneuver and the OPEC.

Social Development Indicators: Growth in Wages and Optimism

Elena Avraamova – Head of Social Development Department, Institute of Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences, Professor. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Victor Lyashok – Senior Research fellow of the Labor Market and Pension System Research Department, Institute for Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Tatiana Maleva – Director of Institute for Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences, Doctor of Business Administration. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Aleksandra Polyakova – Leading Research fellow of the Living Standard and Social Safety Net Research Department, Institute for Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

According to the updated estimate, in 2017 the GDP physical volume index amounted to 101.5% while capital investments increased 4.4% on the previous year. The retail segment of the financial industry saw a decrease in lending-related risks. Economic agents’ inflationary expectations demonstrated generally positive dynamics:  most enterprises’ financial plans are based on the rate of inflation of maximum 4%.

With the passage of time, the pattern of the retail trade turnover does not virtually change. The headline inflation keeps falling: in March 2018 it amounted to 2.4%; services appreciated the most by 3.9% compared to March 2017.

In 2017, reduction of the number of workforce was mainly caused by a decrease in the number of young people at the age of 15–25 years old. The number of the employed in the informal sector decreased because the number of the self-employed and those engaged in the agriculture increased.

In January 2018, drivers of acceleration of growth in wages and salaries were mainly state-financed industries and production of petrochemicals. In February, growth in households’ real disposable cash incomes, real accrued wages and the real size of granted pensions amounted to 4.4%, 9.7% and 1.1%, respectively.

In March 2018, most people’s views of the economic situation in the country and its development prospects changed much for the better. However, the nature of peoples’ adaptive behavior did not change.

Key words: households’ cash incomes, wages and salaries, labor market, prices and social well-being, expected inflation.

Effect of Rouble Exchange Rate on Russia’s Long-term Industrial Development

Vasily Osmakov – Deputy Minister, Ministry of Industry and Trade of the Russian Federation. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The effect of rouble exchange rate on Russia’s industrial development depends on many factors, including enterprises’ sectoral affiliation, long-term plans, export opportunities, etc. However, surveys on preferable rouble exchange rates in industry often rely on senior managers’ personal views.

Key words: rouble exchange rate, industry, long-term development of the industry.

Social and Demographic Situation in Regions: Results of 2017

Natalia Zubarevich – Main Research fellow of the Demography and Migration Research Department, Institute of Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration, Doctor of Geographic Sciences, Professor. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Ramilya Khasanova – Senior Research fellow of the Demography and Migration Research Department, Institute of Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Aleksandra Burdyak – Senior Research fellow of the Living Standard and Social Safety Net Research Department, Institute of Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Yulia Florinskaya – Leading Research fellow of the Demography and Migration Research Department, Institute of Social Analysis and Forecasting, Russian Presidential Academy of National Economy and Public Administration, Candidate of Geographic Sciences. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Despite negative trends observed in households’ incomes in most regions in 2017, as well as a slump in housing building, the labor market saw positive changes. The number of regions with overdue debts on wages and salaries fell to the minimum, underemployment was steadily falling, while the rate of unemployment remained at a low level. Budgets’ expenditures on education increased as those on healthcare, but to a lower extent. There was easing of budgets’ deficit. Budget expenditures remain socially oriented as a result of shortages of resources on other purposes. Generally, the fiscal capacity of regions has become more polarized on the back of fast growth in the Moscow city budget.

In 2017, the natural decline in the population amounted to 134,000 persons as a result of considerable drop in the number of births (by 11%) and insignificant reduction of the mortality rate (by 4%) as compared to the previous year. The rate of death from all the main causes keeps slowly decreasing. The only source of population growth is the migration: in the period under review migration growth amounted to 212,000 people.  The temporary migration to Russia is declining, however, the number of labor migrants did not virtually change. Labor migrants come mainly from the Central Asia. 

In 2017, retail sales of the two main types of alcoholic products – vodka and beer – fell by 10%. It is to be noted that death from incidental alcohol intoxication and misuse decreased by 28%. Generally, the higher consumption of strong spirits in regions, the higher the rate of deaths from alcohol intoxication.

Key words: regional analysis, budget expenditures, birth rate, mortality rate, alcohol consumption, migration.

Main Features of Investment-Construction Activity in 2017

Olga Izryadnova – Head of Structural Policy Department of the Gaidar Institute; Leading Research fellow of the Macroeconomic Research Department, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Russian economy development in 2017 was determined by the change in the four-year trend – amid sustainable quarterly dynamics fixed investments growth constituted 4.4% and that of GDP—1.5% against the previous year. Recovery of the investment activity favorable dynamics was characterized by a simultaneous investment growth in tradable and non-tradable sectors of the economy.

Increased budget constraints resulted in lesser share of state investments. In the context of current interest rate, the importance of enterprises’ own funds in financing fixed investments retained. The share of Russian banks’ loans in capital formation for financing fixed investments in 2017 was minimum. Private enterprises maintained growth of fixed investments nominal volumes thus offsetting instability of state and municipal enterprises’ investment activity.

Key words: investments, capital investments, volume of building jobs, commissioning of housing, tradable sector of the economy and non-tradable sector of the economy.

Russian Derivatives Market: Obstacles for Development and Measures on Their Overcoming

Yury Danilov – Leading Research fellow of the Structural Research Department, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article examines the main obstacles to the development of the Russian derivatives market and makes proposals for their overcoming. The set of obstacles for the development of the futures market differs from the obstacles to the development of markets for other derivative financial instruments. Obstacles to the development of futures markets were formed in the form of a hierarchical system of reasons, based on failings in the state policy for the development of futures markets. The complexity of the development of the markets for other derivative financial instruments is largely due to the opposition in the Russian legislation to derivatives and securities that reduce the flexibility and adequacy of regulation, as a result of which part of the markets for derivative financial instruments on Russian financial assets developed primarily outside the Russian Federation. In the set of proposals presented in the article, the proposals concerning the entire market of derivative financial instruments, as well as its main segments, are highlighted.

Key words: derivatives, futures market, obstacles to development, hedging, basic assets, securitization, structural products, exchange market, securities.

Evaluation of Russia’s GDP in 2017 with the Help of Decomposition Rates of Growth

Andrey Kaukin – Head of Department for System Analysis of Sectoral Markets, Institute of Industry and Markets Infrastructures, Russian Presidential Academy of National Economy and Public Administration; Head of Sectoral Markets and Infrastructure Department of the Gaidar Institute, Candidate of Economic Sciences. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Pavel Pavlov – Senior Research fellow of the Department for System Analysis of Sectoral Markets, Institute of Industry and Markets Infrastructures, Russian Presidential Academy of National Economy and Public Administration. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Decomposition of Russian GDP growth rates has been performed to assess conditions that would enable Russia to achieve economic growth rates surpassing the worldwide average. In 2017, the contribution of fundamental factors of production (labour, capital, total factor productivity) to Russian GDP growth rates was about 0.5–0.9 percentage points. On the other hand, a negative contribution of -0.8(-0.9) percentage points was made by global price environment for crude oil. In 2017, the biggest contribution of 1.4–1.9 percentage points to Russian GDP growth rates came from business cycle factors.

Key words: GDP, decomposition of GDP growth rates, fundamental production factors, global oil price situation and business cycle.

Corporate Lending in Early 2018

Michael Khromov – Head of Department for Financial Studies of the Gaidar Institute; Senior Research fellow of the Center of Structural Research, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Corporate lending market exhibits buoyancy in early 2018. Nominal volumes of new loans issued to corporate borrowers is close to pre-crisis maximum. However, corporate lending remains low against economic activity. The quality of credit portfolios cannot be assessed positively yet due to the resolution of major banks.

Key words: Russian banking sector, corporate lending, financial restructuring of banks.

Federal Budget in 2017

Sergey Belev – Head of Budget Policy Department of the Gaidar Institute; Senior Research fellow of the Budget Policy Department, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Tatyana Tischenko – Senior Research fellow of the Budget Policy Department of the Gaidar Institute; Senior Research fellow of the Budget Policy Department, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In 2017, dynamics of the federal budget’s main parameters are characterized by growth of 0.7 p.p. of GDP in the revenues and a reduction of 1.3 p.p. of GDP in the expenditures as compared to the previous year. This permitted to cut the budget deficit to 1.4% of GDP. The existing global prices of oil promoted growth in tax revenues from domestic production.

Key words: federal budget, budget revenues, budget expenditures, budget surplus.