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Budget Maneuver and Centralization of Insurance Contributions for Non-Working People: Implementation Scenarios and the Effect on the Equilibrium of Regional Budgets

Alexander Deryugin – Senior Research fellow of 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.

Ilya Sokolov – Head of 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.

The evaluation of the effect on individual regions of assignment of expenditure obligations to pay insurance contributions to the mandatory medical insurance for the non-working population from the regional level to the federal one has revealed that the measure in question will permit not only to liquidate a major non-financed mandate, but also together with other instruments of inter-budget relations carry out a budget maneuver in the preferable direction for investment resources, that is, in human capital and transport infrastructure and reduce the existing level of differentiation of regions’ fiscal capacity.

Key words: insurance contributions, non-working population, assignment of authorities, equation subsidies, profit tax.

Russian Industry in H2 2017: Business Surveys

Sergey Tsukhlo – Head of Business Surveys Department, Center for Real Sector 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.

The second half of 2017 was a tough period for Russian enterprises; in particular, in the middle of the year industrial enterprises saw the demand for their products expand at slower pace. In November, however, a representative indicator set of Gaidar Institute’s business survey statistics exhibited positive changes in key indicators. Demand and output, including forecasts, and finished goods inventory were led by upward dynamics that continued into December.

Key words: Russian industrial sector, industrial confidence indicator, industry adaptability index, demand, output, employment, stock of finished products.

The Standard of Living: Incomes, Wages and Lending in Regions

Aleksandra Burdyak – Senior Research fellow of the 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.

Elena Е. Grishina – Head of Department of Labour Markets and Pension System Research, Institute for Social Analysis and Forecasting, 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 January-October 2017, households’ real disposable cash income fell by 1.3% as compared to the relevant period of 2016. It is noteworthy that real accrued wages rose by 3.0%, while the real size of assigned pensions, by 3.9%. During the first three quarters of 2017, Rb 6.4 trillion worth of loans was granted to households; in nominal terms this value is equal to the level of 2013–2014. However, with the inflation rate taken into account a downturn in lending (except mortgages) amounted to about 32%, so lending could not make up for a decrease in the standard of living.

Key words: living standard, disposable cash income, wage, household lending, RF regions.

Technological Dependence on Imports and the Prospects of Import Substitution in the Russian Industry

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

Dina Shchelokova – 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.

In 2014–2016, amid weakening of the national currency and foreign trade limitations due to sanctions the technological dependence of the Russian industry on imports diminished. Such a decrease in it took place on the back of constriction of demand in the economy and an underlying slump in the output of industries which were earlier largely dependent on imports. However, industries which highly succeeded in the past few years in import substitution – an important driver of Russia’s economic growth in the situation of tough foreign trade restrictions – markedly stand out.

Key words: technological dependence on imports, share of imports in industries’ costs, manufacturing, import substitution.

Teachers’ Salaries: Stagnation and Dissatisfaction

Tatiana Klyachko – Director of the Center for Economics Continues Education, Institute for Applied Economic Studies, 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.

Galina Tokareva – Research fellow of the Center for Economics Continues Education, Institute for Applied Economic Studies, 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.

Since 2012, the average salary of school teachers has been increasing. In accordance with Presidential Executive Order No 597 of 7 May 2012, by the end of that year it was to be raised so as to match the average wage level in each given region. However, 5 years later this still has not actually happened. In 2017, almost 60% of school teachers have been dissatisfied with the level of their earnings.

Key words: May Presidential Decrees, school education, teachers, average teachers’ wages, average wage in a region, teachers’ social sentiment.

Short-Term GDP Forecasting by Means of Dynamic Factor Model

Yury Ponomarev – Head of Laboratory Infrastructure and Spatial Studies, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration; Senior Research fellow of Industrial 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.

Yury Pleskachev – Senior Research fellow of Industrial Markets and Infrastructure Department, Institute for Applied Economic Studies, 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.

Forecasting of the GDP real index is an important and complicated objective of the macroeconomics at its present stage. The forecasts are used as a benchmark in decision-making by central banks, tax authorities and private sector agents. The short-term forecasting of GDP and its quality has become particularly important during the 2014–2016 crisis by virtue of the need to clearly comprehend and assess the reaction of the national economy to the economic policy pursued by the government. As stated in the article, the quality of GDP forecasts can be upgraded through utilization both of the data released more frequently than that published on a quarterly basis and dynamic factor models.

Key words: GDP, GDP short-term forecasting, dynamic factor model.

The Problems Related to Statistical Accounting of the Dynamics of the Sector of Small and Mid-Sized Enterprises in Russia

Vera Barinova – Head of Laboratory for Corporate Strategies and Firm Behavior Studies, Russian Presidential Academy of National Economy and Public Administration; Head of Laboratory for Innovative Economy 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.

Stepan Zemtsov – Senior Research fellow of Laboratory for Corporate Strategies and Firm Behavior Studies, Russian Presidential Academy of National Economy and Public Administration; Senior Research fellow of Laboratory for Innovative Economy of the Gaidar Institute, Candidate of Geographical Sciences. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Yulia Tsareva – Research fellow of Laboratory for Corporate Strategies and Firm Behavior 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.

There are substantial differences in approaches by Russia’s various agencies to the evaluation of the number of people employed by small and mid-sized business entities. The data are collected annually by the Rosstat by means of random and blanket business surveys and the Federal Tax Service of the Russian Federation which maintains the Unified Register of Small and Mid-Sized Business Entities. According to the Register, in autumn 2017 over 5.7m small and mid-sized business entities (about 90% of individual entrepreneurs and micro business entities) operated in Russia and they created jobs for 19m people. It is noteworthy that commerce accounted for 42.7% of the total number of small and mid-sized business entities. According to the Rosstat, in 2016 the sector of small and mid-sized enterprises employed 19.9m people (about 27.5% of all those working in Russia), while sales volumes of small and mid-sized businesses amounted to about 31.8% of those of all the legal entities.

Key words: statistical accounting, small and mid-sized enterprises, micro business entities, individual entrepreneurs.

Global Oil Market: Output Cuts and Prices

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.

Global crude oil prices surged in 2017 on the back of the production-cut agreement between OPEC and a group of non-members including Russia. In January-November 2017, Russian crude oil was traded at an average of $53/bbl in the global market, adding $11 to the previous year’s price. In late November, the agreement was extended until the end of 2018. The crude oil price in 2018 is therefore projected to stay above the 2017 average.

Key words: oil, global crude oil market, OPEC agreement, price on Russian crude oil.

Consumer Lending in January-October 2017

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.

Recovery of consumer lending has facilitated growth in expenditures on ultimate consumption and brought about stability of households’ savings amid the ongoing decline of real incomes. However, in the long-term prospect this situation will put at risk both the financial stability of households and the resource base of the banking sector. 

Key words: Russian banking sector, consumer lending, people’s wellbeing.

Foreign Direct Investments in H1 2017

Yury Zaitsev – Senior Research fellow of the 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.

Alexander Knobel – Head of Foreign Trade Department, Center for Real Sector of the Gaidar Institute; Director of the Center for Foreign Trade 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.

The statistics on foreign direct investments (FDI) in Q1 and Q2 2017 published by the Central Bank of Russia shows that growth in incoming FDI in Russia started in 2016 is keeping up. This trend is related to Russia’s renewed GDP growth, higher global prices of energy commodities and reduced macroeconomic and country risks of the Russian economy. However, fundamental problems which create barriers for the FDI influx still remain unsolved.

Key words: direct foreign investment, incoming direct investment, outgoing direct investment, economic sanctions.

Survey of Current Business (October 2017 – January 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.

Yury Glushko – Senior 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.

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.

After the deterioration of many of the examined by REB indicators, recorded in September, data for October 2017 indicate some improvement in the mood of the industrial sector. The most optimistic are indicators of output and wages (their diffusion indices grew by 16 and 11 percentage points, respectively). The levels of capacity utilization rate and labor utilization rate increased (+4 pp each). The share of financially sound enterprises raised by 9 percentage points.

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.

Inflation in November 2017

Alexandra Bozhechkova – Head of Monetary Policy Department, Center for Macroeconomics and Finance of the Gaidar Institute; Senior 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.

Pavel Trunin – Head of Center for Macroeconomics and Finance of the Gaidar Institute; Leading Research fellow of the Center for the Study of Central Banks, 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.

Inflation in Russia dropped to 2.5% year-on-year in November 2017, hitting lows not seen in Russia’s recent history, in response to a good crop, Russian rouble appreciation and slow demand recovery. It appears to be unlikely that consumer price growth will leap over 2.5–2.7%. The economic contraction has prompted the Bank of Russia to double down on easing the monetary policy, cutting the key interest rate by 0.5 percentage points, straight away to 7.75%, on 15 December.

Key words: inflation, monetary policy, key rate, outflow of capital, Bank of Russia.