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Regional Budgets in H1 2018

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

According to the results of H1 2018, the growth rates of revenues of consolidated budgets of constituent entities of the Russian Federation largely exceeded the current level of the rate of inflation, so, at year-end most regional and local budgets can expect growth in their real incomes. A recent decrease in the debt burden of the less well-off constituent entities is another evidence of the financial situation getting back to normal at the regional level.

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

Economic Situation in the Industry in H1 2018

Sergey Aukutsionek – Head of 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.

Alexandra Batyaeva – 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.

The article presents a set of different non-traditional economic indicators obtained in the surveys, which were conducted by the «Russian Economic Barometer» among Russian industrial enterprises in the first half of 2018. A wide range of considered indicators provides a great possibility to make a more comprehensive assessment of the state of affairs in Russian industry.

Key words: Russia; industry; industrial enterprises; production and investments restrictive factors; suppliers; wholesale buyers; recruitments and redundancies; risk of bankruptcy; competitiveness; sources of investments; relations with banks; production and inflation; demand prognoses.

Fulfillment of the President’s May 2012 Decrees: Consequences for the Public Sector

Marina Lopatina – Junior Research fellow of Labor Market and Pension System 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.

Victor Lyashok – Research fellow of Labor Market and Pension System 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.

In early 2018, growth in wages and salaries in Russia was related to a substantial increase in the labor remuneration of employees in education and healthcare. Such an increase was feasible as a result of fulfillment of the President’s May 2012 Decrees which set targets as regards wages and salaries of the public sector’s employees. According to the data of January-June 2018, this objective has been achieved, except for individual regions.

Key words: Presidential May 2012 Decrees, budget sector, education and health care, wages of education and health care employees.

Survey of Current Business (June-September 2018)

Sergey Aukutsionek – Head of 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.

Stanislav Belyakov – 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 June 2018 many of the examined by REB indicators improved against the background of the previous month, as well as in the longer term. The diffusion index of output added 19 points in comparison with the previous month. The diffusion index of wages rose by 4 percentage points in comparison with May and reached its maximum value for 6 years. The diffusion index of purchases of equipment increased by 6 points and reached a maximum in the last 11 years. And the share of financially sound enterprises reached in May a record high level for the whole history of observations since 1993.

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.

Social and Demographic Situation in H1 2018

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 for 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.

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.

The economy and the social services sector are getting out of the stagnation, but very slowly. In most constituent entities of the Russian Federation, households’ incomes keep falling. However, the fiscal situation of regional budgets have changed for the better owing to a substantial growth in individual income tax revenues and transfers. A considerable growth in social expenditures was driven by the presidential elections and elections of governors in a quarter of regions.

The natural decline in Russia’s population gathered momentum and amounted to 170,500 people in January-July 2018. The number of deaths exceeded by 1.4% the relevant index of the previous year, while the number of births was 4.2% lower than in the same periods of 2017.

In H1 2018, the migration gain was equal to 75,400 people, however 2/3 of the regions, most of which are situated in the eastern part of the country still observe a migration outflow. The migration gain index has generally been declining since the beginning of the 2010s. In the past few years, the temporary migration to Russia was declining slowly, too. Growth in the share of legal migrants seen in the past few years has come to a halt, while the number of newly issued permit documents has somewhat decreased as compared to 2017.

Key words: regional analysis, budgets’ expenses, social indicators, birth rate, mortality rate, migration.

Russia in Global Exports in 2017

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.

Alexander Firanchuk – Senior Research fellow of the Center for Foreign Trade 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.

According to the year-end data for 2017, Russia’s share in global exports of all the goods amounted to 2.0%, an increase of 0.2 p.p. on 2016 (1.8%). As compared to the pre-crisis 2013 year, the share of Russian exports on global markets of inorganic chemicals, mineral fuel, nickel, aluminum and furs has fallen while that of cereals, fertilizers, lead and paper increased.

Key words: export, import, world trade of goods, word trade of services, word export.

Socio-Economic Indicators and the Situation of Pensioners

Aleksandra Burdyak – Senior Research fellow of the Living and Social Protection 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.

Victor Lyashok – Research fellow of Labor Market and Pension System 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.

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.

In January-July 2018, the retail trade volume increased by 2.5% as compared to the relevant period of the previous year (zero dynamics were observed a year before). Within the first seven months of 2018, consumer prices rose by 2.3% year on year (a substantial decrease relative to 2017).

In June 2018, the number of the workforce amounted to 76.3m people, a decrease of 0.16m people on July 2017. The unemployment indices fell to the historic low in the period from 1992. The level of unemployment calculated in accordance with the ILO’s methods has remained unchanged for three months running (4.7%), while with a seasonal component excluded it kept falling. As of the end of July, the level of the registered unemployment was equal to 0.9%.

Growth rates of incomes and pensions still lag much behind those of wages and salaries. In July 2018, households’ disposable cash incomes, accrued wages and granted pensions increased by 2.0%, 8.0% and 0.8%, respectively, in real terms as compared to July 2017.

Key words: wages and salaries, labor market, prices, loans, households’ cash incomes, poverty and minimum subsistence level, pension.

Russia’s External Debt

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.

In 2018 Russia continues to reduce, since the 2014–2015 crisis, its external debt. An additional factor contributing to the reduction of debt to non-residents is that non-residents have reduced their holdings of OFZ bonds over fears of new sanctions against Russia. Therefore the today’s level of external debt poses no threat to financial stability of the country.

Key words: Russia’s foreign debt, ruble’s exchange rate, capital outflow, sanctions against Russia, Bank of Russia.

Profits of the Banking Sector in January-July 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.

Balance sheet profits declined markedly in January-July 2018 compared to the same period of 2017 mainly because of resumed growth in loan loss provisions. A positive factor was represented by growth in net interest income and in profits from regular banking operations.

Key words: banking sector, banking profit, regular banking operations, reserves for possible losses.

Inflation in August 2018 and the September Increase of the Key Rate

Alexandra Bozhechkova – Head of Monetary Policy Department of the Gaidar Institute; Senior 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.

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.

In September the Russian central bank has raised its benchmark interest rate, for the first time since 2014, by 0.25 percentage points to 7.5% p.a. in response to increasing risks of higher inflation, including the Russian rouble devaluation (induced by new sanctions against Russia and by capital outflows from emerging markets on the back of tightening US Fed’s monetary policy) as well as the expected VAT hike scheduled for 2019. Although the above risks have realized only in part, the central bank has had to raise its 2019 inflation forecast to 5.5% and to adopt a tighter monetary policy.

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

Drop in the 2018 Grain Yield: Are There Grounds for Concern?

Natalia Shagayda – Director of Center for Agro-Food Policy, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration; Head of Agricultural Policy Department of the Gaidar Institute, Doctor of Economic Sciences. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Vasily Uzun – Main Research fellow of the Center for Agro-Food Policy, Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration; Main Research fellow of the Agricultural Policy Department of the Gaidar Institute, Doctor of Economic Sciences, Professor. Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

A decrease in the gross grain yield in 2018 as compared to the record-high yield of 2017 does not entail any risks to domestic consumption needs. With reserves taken into account, the 2018 yield is quite enough to meet households’ needs in grain and cereal products, provide the livestock sector with concentrated fodder and underpin exports at the past three years’ average level. The case for prices on meat products to be increased and grain exports limited allegedly due to a decrease in the gross grain yield and appreciation of grain prices is baseless.

Key words: agriculture, cereal crops, cereal harvest, agricultural organizations, agricultural producers.

Execution of the Federal Budget H1 2018

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.

According to the results of H1 2018, federal budget revenues increased by 1.8 p.p. of GDP as compared to the relevant period of the previous year, while the share of oil and gas revenues rose from 40.4% to 45.6%. On the contrary, expenditures in relation to GDP fell by 1.2 p.p. As a result, in the first six months of this year the budget was administered with a surplus of 1.9% of GDP as compared to the deficit of 1.0% of GDP a year before.

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

State Agrarian Policy: Innovative Aspect

Valeria Shchennikova – Senior Lecturer of the Department of Economic Security and National Security, Institute of Law and National Security, 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.

The tasks and priorities of the state agrarian policy, mechanisms for supporting the country’s agriculture, state land policy as the basis of agrarian policy are considered in the article. Barriers that hamper the availability of land resources for the production of agricultural products are identified and the need for introducing modern geoinformation technologies is justified.

Key words: agrarian policy, food security, land management, agriculture, land monitoring, innovation, system approach.

Parameters of Economic Growth Model for the Period until 2024

Georgy Idrisov – Director of the Center for Real Sector of the Gaidar Institute; Director of Institute for Sectoral Markets and Infrastructure, Russian Presidential Academy of National Economy and Public Administration, Doctor 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 System Analysis of Sectoral Markets and Infrastructure Departments, Institute for Sectoral Markets and Infrastructure, 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.

Aiming to become one of the world’s top five economies, Russia’s economy should advance in real terms by 30% (in nominal terms by 50%) by 2024 over 2016. To reach this goal, investments should represent up to 25% of GDP by 2024. Economic boost can be driven by key investment-led sectors, namely construction sector, investment goods sectors, and sectors that underlie the digital economy infrastructure.

Key words: Russia, economic growth model, GDP, investment, investment sectors of economy, digital economy.

Sanctions Against the Russian Aluminum Industry

Pavel Pavlov – Senior Research fellow of Department for System Analysis of Industrial Markets, Institute for Sectoral Markets and Infrastructure, 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.

The article analyzes the economic constraints for the use of sanctions by the US against the Russian aluminum industry. A trial attempt to introduce full-scale sanctions against UC Rusal exacerbated the deficit of aluminum supply in the world market and caused a significant increase in world metal prices. Among the key economic limitations for the application of the sanctions regime in relation to the Russian aluminum industry in the near future is the shortage of metal supply in the world market, as well as the dependence of the US real sector on the import of primary aluminum. These circumstances should be taken into account when discussing measures currently being developed to increase domestic demand for aluminum, ensuring that the balance of sectoral and Russian public benefits and costs is taken into account.

Key words: sanctions, aluminum industry, export structure, world aluminum prices, government support measures.