The Gross domestic product (GDP) in Russia increased by 4.5 percent in the first quarter on an annual basis, announced on Wednesday the Russian Ministry of Economic Development, said yesterday. Only in March the economy grew by 4.9 per cent compared to same month of 2009. “In March visible recovery of activity after the break in February, said in a statement the ministry. In the second month of the year, GDP growth slowed to 3.9 percent in annual growth to 5.2 percent in January. In 2009 the Russian economy contracted by 7.9 per cent, after noting an increase of 5.6 percent for 2008. The country was hit hard by economic crisis and in particular the fall in oil prices, as exports of energy products accounted for approximately 60% of total exports. The gradual recovery of markets and price levels of oil and gas, however, managed to stabilize the economy. Recently, Russian Prime Minister Vladimir Putin stressed that Russia has gone out of recession, although this does not mean that the crisis ended.
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The Russian economy, which ranks 11th largest site in the world, has contracted by 7.9 percent in 2009, cited by Bloomberg. This is the biggest drop in gross domestic product (GDP) of Russia within one year of the Soviet Union in 1991. In the last quarter of 2009, however, visible signs of mitigating the economic downturn of the country. Negative GDP growth for the fourth quarter amounted to 3.8% which is much smaller than the decline of his previous two quarters. That contributes to increased exports of raw materials and the price of oil, gas and metals. The price of Ural oil doubled at the end of last year compared with their levels of 32 dollars per barrel in December 2008 sales of oil and natural gas are the source of about 25% of GDP. Russia’s GDP shrank by 7.7 percent in the third quarter and a record 10.8 percent in the second. Increased demand for raw materials worldwide and the depletion of inventories, however, led many extractive companies in the country to increase production at the end of last year. Net exports of Russia, which represents the difference between the value of exports and imports increased by 61 percent in the fourth quarter after rising by 108% in the third. However, consumer spending remains weak point of the Russian economy, declined by 9.4 percent in the fourth quarter. Limited investment costs of Russian companies and high unemployment also threaten the economic recovery of the country.
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Russia became the next country to sign a nuclear agreement with India. So she undertook to supply the reactors for nuclear power plants for the rapidly developing Asian countries. Currently nuclear companies from France, USA, Canada and the UK had agreements to supply reactors to India, but apparently the country expands its network of suppliers. This is linked to India’s energy strategy, which is set the electricity growth of nuclear power plants from its current level of 4 thousand to 470 thousand MWh within the next 40 years, transmit Financial Times. The deal with Russia came after the agreement India signed with the United States last year for the use of nuclear energy for civilian purposes. It helps the country to acquire nuclear reactors and to build plants to import nuclear fuel and technology for so-called. nuclear forces. Before that, for 30 years, India was denied access to nuclear technology for peaceful purposes. The reason for this was made in 1974 tests of nuclear warheads, and refusing to sign the Non-Proliferation Treaty of Nuclear Weapons in 1968.
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The Bank of America-Merrill Lynch increased its forecast growth in gross domestic product (GDP) of Russia for 2010 from 3.9% to 5%, says the analysis, quoted by RIA Novosti. The increase in the estimate is based largely on expectations of increases in 2010/11, the average prices of Brent crude oil to 85 dollars per barrel in the previous forecasts for $ 75 a barrel. “The rise in oil prices by an average of 10% leads to accelerate the growth of Russia’s GDP by 1 percentage point,” said analysts from Merrill Lynch. They estimated that an additional 10 dollars a barrel to the price of oil will bring to Russia 26 billion dollars more revenue, which will affect positively the balance of payments. Thus, the positive trade balance of the country in 2010 amounted to 4,1% of GDP (compared with a previous forecast of 2.6 percent). According to the latest Merrill Lynch forecasts the budget deficit to Russia next year will be 4.3 percent (compared with a previous forecast of 5%). The bank commented that the accumulated funds in the so-called. Reserve and home loans will be sufficient to cover the budget deficit, but in 2011 Russia will probably have to borrow funds from outside. Consumer demand in Russia is still a low level, but this situation is normal for this stage of the economic crisis, says an analysis of the bank. From Merrill Lynch provide unemployment in Russia soon begin to decline, while there is growth in real incomes of the working population by 2%, and pensions – by 40%. Specified by the financial institution that wage growth in the private sector is questionable, but because of relatively low inflation (an average of 8% last year) and employees in private companies will have to rely on, albeit insignificant, increase their income.
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The Central Bank of Russia will modify and enhance the protection of banknotes of 1000 rubles (around $ 35) without changing their design, has advised Vice-President of the Central Bank, quoted by Prime-Tass. To protect the notes will be added as visual and machine-readable symbols. The goal is to be extremely difficult to counterfeit banknotes. It is envisaged that the banknotes of 1000 rubles enhanced protection to be put into circulation in the second half of 2010, as the previous modification will be withdrawn from circulation. New protective symbols to be embedded in the banknotes of 1000 rubles, will later be included in the enhancement of the protection of banknotes with face values other in which there will be some increased costs of manufacturing them. At present it is considered that the Russian ruble is one of the best protected against counterfeiting banknotes in the world, second only to the Swiss franc.
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The Russian Finance Minister Alexei Kudrin announced that the stock market in the country begins to “overheat”. This is a consequence of the huge short-term speculative flows, which flow into the capital market in Russia. During a conference in Moscow Kudrin indicated that we should be careful about investing in this moment forward Bloomberg. Since the beginning of the year, the main stock index in Russia – RTS, has risen by 128%. Last year Russian market recorded one of the biggest declines in all markets worldwide. But this year, along with lifting the price of oil to the country are turning huge cash flows. This leads to an appreciation of the ruble and high growth of stock indexes. Kudrin today also announced that Russia will sell its stake in bank VTB within the next two years, will pursue profit of at least 67 per cent. VTB is the largest lender in Russia, the State has acquired 85.5 percent of its capital last year.
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From March onwards from emerging stock markets saw unprecedented gains in the high exchange zone and partly even two-digit three-digit figures. Since the beginning of the year the Russian MICEX stock index reached a growth of 120% whole, the Indian SENSEX climbed almost 70 percent and Chinese shares in Hong Kong grew by nearly 60%. Naturally these markets and had to swallow heavy losses during the financial crisis in 2008, however development of the background of global economic and financial framework conditions is more than impressive. Because even the prospects for growth in the U.S., EU and Japan are much more limited and continue to report and before the risks of downward movement. Although in 2010 is hardly likely to repeat growth, Raiffeisen Capital Management in emerging markets saw further potential for upward movement, not a potential investment bubble. “The shares of these countries really are no longer regarded as too favorable, but from our perspective, they continue to represent attractive investment opportunities. And in 2010 the focus of investors will stand Russia, China and India, “said Angelika Milendorfer, Head of Equities of emerging markets at Raiffeisen Capital Management in Vienna.
Russia – oil production will be appreciated
The largest volatility among the three countries mentioned shows Russian stock market. After a sharp downturn in the second half of 2008, Russia is currently one of the countries with the highest performance. “Among the investors Russia is usually limited to its rapid large stocks of oil and natural gas and energy sector is undoubtedly the most important for the country. However, many other sectors offer interesting investment opportunities. Telecommunications, finance and other sectors have potential for further growth, “continues Milendorfer.
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