Russia has undergone significant economic changes since the collapse of the Soviet Union and has evolved over the past 20 years from a globally isolated, centrally planned economy to a market-based, globally integrated economic system. During the economic reforms in the 1990s, most industrial enterprises were privatized. Meanwhile, property rights protection in Russia is still weak, and the private sector is subject to significant government interference.

The changes of the early 1990s could not but affect the country's economy, as a result of which Russia's GDP has been constantly declining for more than 5 years. After the collapse of the USSR, the first slight economic growth in Russia occurred only in 1997. In 1997, however, the Asian financial crisis began, which negatively affected the Russian economy. This led to the fact that in 1998 the Russian Government was unable to fully pay off its debts, and the subsequent sharp depreciation of the ruble significantly reduced the already low standard of living of ordinary citizens. Thus, 1998 remained in history as a year of crisis and a large outflow of capital from the country.

Despite such a significant decline, already in 1999 the Russian economy began to recover. The main stimulus for economic growth was the very low exchange rate of the ruble against leading world currencies, which had a very positive impact on domestic production and exports. Then the country entered an era of stable economic growth. Stable economic growth in recent years has been made possible primarily due to high oil prices, combined with structural reforms carried out by the Russian Government in 2000-2001. GDP growth has caused increased confidence among business circles and ordinary consumers in a more favorable economic future for Russia, as a result of which the influx of foreign investment into the economy has significantly increased and the outflow of capital from the country has practically stopped.

Russian industry is primarily split between producers of globally competitive goods—in 2009, Russia was the world's largest exporter of natural gas, second largest exporter of oil, and third largest exporter of steel and primary aluminum—and other less competitive heavy industries that remain dependent on the Russian domestic market. This dependence on the export of raw materials makes Russia vulnerable to global economic crises and highly volatile world commodity prices. Since 2007, the Russian government has adopted an economic program to reduce this dependence and create a high-tech sector, but the results of the implementation of this program still cannot be boasted.

Russia's economy has grown at an average annual rate of 7% since 1998, leading to a doubling of citizens' real total disposable incomes and the emergence of a middle class. However, in 2008-2009. The Russian economy was once again unprepared for the impact of the global economic crisis, as oil prices fell sharply and foreign investment in the economy declined significantly. The Russian Central Bank then spent one third of its gold and foreign exchange reserves (about $600 billion in total) to slow down the devaluation of the ruble. The government also spent about $200 billion to implement an economic rescue plan to increase liquidity in the banking sector and support domestic companies unable to repay large foreign debts.

The decline in economic activity was overcome in mid-2009 and the Russian economy began to grow in the first quarter of 2010. However, severe drought and fires in central Russia have reduced agricultural output, prompting a ban on grain exports and a slowdown in other sectors such as manufacturing and retail sales.

High oil prices supported growth of the Russian economy in the first quarter of 2011 and helped Russia reduce the budget deficit inherited from the 2008–09 crisis, but inflation and increased government spending limited the positive impact of oil revenues.

Russia's long-term problems include a shrinking labor force, high levels of corruption, difficulties in accessing capital for small businesses and non-energy companies, and poor infrastructure in need of large investments.

Russia's GDP

The Russian economy has experienced GDP growth over the past 13 years, with the exception of 2009 (in 2000 - 10%, in 2001 - 5.1%, in 2002 - 4.7%, in 2003 - 7.3%, in 2004 - 7.2%, in 2005 - 6.4%, in 2006 - 8.2%, in 2007 - 8.5%, in 2008 - 5.2%, in 2010 - 4.3%, in 2011 - 4, 3%, in 2012 - 3.6%, in 2013 - 1.5%), industrial and agricultural production, construction, real income of the population. There was a decrease in the population living below the poverty level (from 29% in 2000 to 13% in 2007). From 1999 to 2007, the production index of manufacturing industries increased by 77%, including the production of machinery and equipment - by 91%, textile and clothing production - by 46%, food production - by 64%.

The volume of GDP in 2005 amounted to 21665.0 billion rubles. and increased by 6.4% compared to the previous year. The increase in industrial production in 2005 was 4.0%, retail trade turnover - 12.0%, investment in fixed assets - 10.5%, transport freight turnover - 2.6%. The consumer price index was 10.9%, the GDP deflator was 18.8%. Foreign trade turnover in 2005 amounted to $370.4 billion. The trade balance was $120.1 billion. The volume of Russian GDP in 2006 amounted, according to preliminary data, to 26,621 billion rubles, or $979.1 billion at the weighted average exchange rate for the year (a year ago - $763.2 billion), which is 6.7% more in real terms. Tax revenues transferred by the Federal Tax Service to the federal budget in 2006 amounted to 3,000.7 billion rubles. (an increase of 19.7% compared to 2005). The Russian gold and foreign exchange reserve set another record - as of January 5, 2007, the gold and foreign exchange reserves of the central bank amounted to $303.9 billion. This gave Russia third place in this indicator in the world after China and Japan. According to Federal Law No. 197-FZ dated December 1, 2006, the parameters of the federal budget for 2006 were finally approved in the following amount: expenses in the amount of 4,431,076,807.1 thousand rubles, income in the amount of 6,170,484,600.0 thousand rubles. Thus, the federal budget surplus for 2006 is 1,739,407,792.9 thousand rubles. Official inflation was 9%.

In 2007, the growth rate of the Russian economy (8%) was the highest in recent years. At the end of this year, Russia entered the top 7 largest economies in the world, leaving behind Italy and France, and also entered the group of countries with a high level of human development.

The global economic crisis has not spared Russia either. According to the World Bank, the Russian crisis of 2008 “began as a private sector crisis, triggered by excessive private sector borrowing in the face of a deep triple shock: terms of trade, capital flight, and tightening foreign borrowing conditions.” There was a collapse in the Russian stock market, devaluation of the ruble, a decrease in industrial production, GDP, personal income, as well as an increase in unemployment. The government's anti-crisis measures required significant spending. As of July 1, 2009, the international reserves of the Central Bank amounted to $412.6 billion. Compared to July 1, 2008, when the volume of Russia's international reserves amounted to $569 billion, this figure decreased by 27.5%. In May 2009, Russia's GDP decreased by 11% compared to the same month last year. Exports for this month fell by 45% compared to May 2008, amounting to $23.4 billion; imports decreased by 44.6% to $13.6 billion. The trade balance decreased by 1.8 times. In the second half of 2009, the economic recession was overcome; in the third and fourth quarters of this year, seasonally adjusted GDP growth in Russia amounted to 1.1% and 1.9%, respectively.

At the end of 2009, Russia's GDP fell by 7.9%, which was one of the worst indicators of GDP dynamics in the world, while at the same time showing better dynamics than several countries of the former USSR. These indicators allowed Russia to reach third place in terms of GDP per capita among the countries of the former USSR, surpassing Latvia in this indicator and losing only to Estonia and Lithuania.

In 2009, Russia's gross domestic product (GDP) was estimated at $2,109 billion. The UK ($2,281 billion), France ($2,097 billion) and Brazil ($2,030 billion) have similar GDPs. GDP per capita in Russia is $14,900, in the United Kingdom - 35,900, in France - 33,100, in Brazil - $10,600. In the fall of 1999, Russia's external debt (including the debt of the USSR) reached $160 billion, and according to this indicator it came out on top in the world, but this debt was virtually completely eliminated in 2005-2007.

In March 2010, a World Bank report noted that Russian economic losses were less than expected at the beginning of the crisis. According to the World Bank, this was partly due to the large-scale anti-crisis measures taken by the government.

According to the results of the first quarter of 2010, in terms of GDP growth (2.9%) and industrial production growth (5.8%), Russia came in second place among the G8 countries, second only to Japan. At the end of 2010, Russia's GDP growth amounted to 4.0%, Russia took 6th place among the countries in the world in terms of GDP in PPP terms. In 2011, Russia's GDP grew by an estimated 4.2%.

The volume of industrial production in the Russian Federation in 2012 increased by only 2.6% compared to the result of 2011, when an increase in industrial production of 4.7% was recorded. In 2012, production volume in manufacturing industries increased by 4.1%, production and distribution of electricity, gas and water increased by 1.2%.

Inflation in Russia

Inflation in Russia in recent years has decreased to 6-7% per year, but remained above the target value of the Central Bank of the Russian Federation - less than 6%. In 2012, inflation in Russia was 6.6%, in 2013 - 6.5%. Over the past 5 years, the rate of inflation in the country has approximately halved and is currently at levels close to the minimum since 1992. The minimum annual inflation rate was observed in April-May 2012 - 3.6%, after which the growth rate of the consumer price index in Russia, due to the increase in tariffs of natural monopolies, accelerated significantly.

See graphs and numerical values:

Mining industry of Russia

Many types of mineral raw materials are extracted: oil and natural gas (Western Siberia is the main base of the country), coal, iron ore (Kursk magnetic anomaly, deposits of the Urals, Western Siberia, etc.), apatites, potassium salts, phosphorites, diamonds, etc. Volume gross value added in mining - 3.1 trillion rubles (2009). Revenues from the export of raw materials traditionally make up a significant part of the country's budget.

In 2012, the volume of mineral extraction increased by 1.1% compared to the previous year. In 2012, coal production amounted to 354 million tons, which is 5.2% more than in 2011. Oil production (including gas condensate) reached 517 million tons, an increase of 0.9% year on year. Gas production volume amounted to 653 billion cubic meters - a decrease of 2.7%.

At the end of 2009, Gazprom became the most profitable company in the world, ahead of the American Exxon Mobil, while taking 50th place in terms of total revenue. In November 2010, Russia produced an average of 10.24 million barrels per day, a record high since the collapse of the USSR in 1991.

In Yakutia there is the Elkon uranium deposit - the richest of the explored deposits in Russia, it accounts for more than half of the proven uranium reserves in the country - about 344 thousand tons and is considered one of the largest in the world. It is divided into 8 license areas, one of which is the Yuzhnaya zone, the uranium reserves of which are estimated at over 250 thousand tons. In 2006, sufficiently explored and ready-for-development uranium reserves in the bowels of Russia were estimated at 615 thousand tons.

The Russian company ALROSA is the world's largest diamond exploration, mining and sales company. The Udokan deposit is one of the largest in the world in terms of copper reserves. Large copper reserves are available in Norilsk. The Dukat deposit is one of the largest in the world in terms of silver reserves.

Manufacturing industry in Russia

According to the General Director of the Expert media holding Valery Fadeev, the added value in industry per person per year for the Russian Federation is 1.4 thousand US dollars versus 6-10 thousand in developed Western countries. Over the past 20 years, the country has not paid the necessary attention to industry, purchasing cheap products abroad. According to precise data on the Expert magazine website, in 2007, the maximum added value of the manufacturing industry per capita was $5.8 thousand in the United States, which ranks first in terms of overall value added. In the global ranking in terms of value added, Russia ranks 9th in terms of total volume, and in per capita terms it surpasses countries such as China, Thailand and Brazil, and is slightly inferior to Mexico and Turkey.

Growth rate of industrial production in Russia, % compared to the previous year

The share of manufacturing industries in Russian industrial production in 2007 was 66%. The volume of gross value added in manufacturing is 6.3 trillion rubles (2010).

Defense-industrial complex. In 2007, the volume of sales of the Russian defense industry amounted to $18.6 billion, of which $11.6 billion were government orders, $7 billion were exports. From 2000 to 2007, the volume of sales of the Russian defense industry increased by 3.7 times, including government orders by 6.4 times, exports by 2.2 times. In 2009, production volume in the Russian defense industry increased by approximately 10%. In 2010, Rosoboronexport's total foreign sales amounted to $8.7 billion (it has grown 10 times since 2001).

Russia's share in the global arms market is 23%, and is second only to the US share (32%). In monetary terms, in 2010, military exports exceeded $10 billion for the first time. In 2009, Russia had military-technical cooperation with more than 80 countries of the world, and supplied military products to 62 countries, and the volume of Russian exports of military products in 2009 exceeded 260 billion rubles ($8.8 billion). According to SIPRI data, the share of combat aircraft deliveries in the period 2005-2009. amounted to 40% of total exports for Russia; according to Rosoboronexport, this share is approximately 50% of the volume of all sales of Russian weapons.

The Russian Federation has multi-billion dollar contracts for the supply of weapons and dual-use products with India, Venezuela, China, Vietnam, Algeria, Kuwait, Greece, Iran, Brazil, Jordan, Syria, Malaysia, Indonesia, Peru.

In 2006, the Russian state weapons development program for 2007-2015 was approved, providing for the purchase and development of military equipment (military transport aircraft, space vehicles, vehicles, armored vehicles, missile defense and air defense, ships and submarines) for the Russian army. A total of 4.9 trillion rubles will be allocated to finance this program during its operation. At the end of September 2010, Deputy Prime Minister Sergei Ivanov announced a different amount: over ten years, until 2020, the budget of the state arms program will be at least 22 trillion rubles.

Russian defense industry enterprises: Izhevsk Machine-Building Plant, Nizhny Novgorod Machine-Building Plant, Votkinsk Plant and others.

Shipbuilding. The Russian shipbuilding industry is traditionally one of the most technologically advanced sectors of the economy. Russian shipyards have experience in building ships of almost any class, type and tonnage. The industry has some of the largest manufacturers of power and automation systems. The scientific potential of research and design institutes, industrial and academic laboratories allows us not only to carry out unique orders for ship design, but also to develop new conceptual directions in shipbuilding.

In Russia there are more than 1000 enterprises engaged in shipbuilding, ship repair, production of propulsion, hydroacoustic, navigation, auxiliary, deck and other types of equipment, materials and components for ships, as well as carrying out scientific activities in the field of shipbuilding and marine technology.

The largest centers of Russian shipbuilding are St. Petersburg, Severodvinsk, Nizhny Novgorod, and the Kaliningrad region. In accordance with the decree of the President of the Russian Federation, signed in March 2007, the United Shipbuilding Corporation was created, the main field of activity of which is the development of civil shipbuilding. The United Shipbuilding Corporation consolidated 19 existing large shipbuilding and ship repair enterprises.

In 1995-2005, Russian shipbuilding enterprises placed 4% of the volume of Russian ship orders. By 2007, this figure increased to 6%; in 2008 it was 8%. In 2008, sales volume in Russian shipbuilding amounted to 150 billion rubles. In 2009, the growth of Russian shipbuilding was 62%.

Automotive industry. The largest Russian automobile industry enterprises: - AvtoVAZ - the largest manufacturer of passenger cars in Eastern Europe,

KAMAZ is in 11th place in the world among heavy truck manufacturers,

GAZ Group: (Pavlovsk Bus Plant LLC (PAZ), Golitsyn Bus Plant OJSC (GolAZ), Saransk Dump Truck Plant OJSC, Avtodizel OJSC (Yaroslavl Motor Plant), Likinsky Bus Plant LLC (LiAZ) , KAVZ LLC, Ural Automobile Plant OJSC, Chelyabinsk Road Construction Machines OJSC, Zavolzhsky Crawler Tractor Plant OJSC, Arzamas Machine-Building Plant OJSC, Ulyanovsk Motor Plant OJSC, Kanash Automotive Unit Plant LLC )

Sollers

ZIL - Likhachev Plant

Bryansk Automobile Plant (BAZ) is a leading manufacturer of heavy-duty wheeled chassis, including for the oil and gas complex, heavy-duty truck cranes, pipe haulers, tank trucks, fuel tankers, cementing units, and chassis for various military complexes.

At the end of 2008, 1.471 million passenger cars and 256 thousand trucks were produced in Russia. In the same year, 132 thousand cars and 45 thousand trucks were exported from Russia for a total of $1.7 billion.

In the period from 2000 to 2010, several dozen automobile factories were opened in Russia, producing cars under the brands of well-known manufacturers, including Volkswagen, Skoda, BMW, Ford, Renault, Toyota, Chevrolet, Peugeot-Citroen-Mitsubishi Automobile Alliance, Nissan, Opel , Kia, Volvo Truck and some others. The plants' capacities are designed for production ranging from large-unit assembly to small-unit assembly, including Completely Knocked Down (CKD) assembly with a high degree of localization of production, with welding and painting of bodies and assemblies. The opening of new factories continues.

In the Russian automotive industry there are also ambitious projects of the Russian supercar Marussia and the hybrid car of Mikhail Prokhorov.

In Russia there are enterprises in the aviation, tank, missile and other sub-sectors of engine building. More than 80% of assets in the Russian engine industry are controlled by the United Engine Corporation.

Aerospace industry. Strategy for the development of the aviation industry of the Russian Federation for the period until 2015 The assets of the Russian aircraft industry are concentrated in two specialized integrated structures: the United Aircraft Corporation (it includes the largest aircraft manufacturing enterprises) and Oboronprom (it includes the largest helicopter and engine manufacturing enterprises). These companies include 214 enterprises and organizations, including 103 industrial, 102 research institutes and design bureaus. The total number of people employed in the Russian aviation industry is more than 411 thousand people. The largest scientific centers of aircraft manufacturing are: VIAM, CIAM, TsAGI, LII, GosNIIAS, ONPO "Technology".

In terms of the volume of military aircraft production, Russia is in 2nd place in the world, and in helicopter manufacturing - in 3rd place in the world (6% of the world helicopter market).

In 2010, the revenue of Russian aviation industry enterprises amounted to more than 504 billion rubles, of which 31% came from aircraft manufacturing, 18% from helicopter manufacturing, 24% from engine manufacturing, 8% from aggregate manufacturing, 11% from instrument manufacturing, and 8% from special equipment manufacturing. During this year, more than 100 military aircraft were produced in Russia. After the BRIC summit in April 2010, it became known that negotiations were underway with the Brazilian aerospace corporation Embraer on the joint development and production of an aircraft for Russian regional aviation. Probably, we are talking about using the capacities of the Kazan Aviation Plant.

There are estimates according to which, in the event of a merger of the Russian and Ukrainian aviation industries, aircraft manufacturers of the two countries are capable of forming the third most important center of global aircraft manufacturing - after the United States and Western Europe. In April 2010, UAC and the Ukrainian state company Antonov agreed to create a company coordinating the joint production of An-124 aircraft, production of An-148, An-70 and An-140 aircraft. It is also assumed that UAC will gain control of Antonov in exchange for a stake in UAC. Russian aviation industry manufacturers cooperate (cooperation, joint production) with almost all the world's leading manufacturers, including Boeing, Airbus, Snecma corporations, the Brazilian Embraer, a number of Italian concerns from the Finmeccanica group (for example, Agusta Westland, Alenia Aeronautica), with French manufacturers ( 12 companies), with Chinese manufacturers, with a number of Ukrainian factories.

Recently, Russian aircraft manufacturers have concluded multibillion-dollar firm contracts for the supply of civil aircraft to foreign air carriers (SSJ-100 and MS-21, total amount more than $7 billion). The structure of Roscosmos, according to the agency’s official website, includes 66 enterprises.

In terms of the intensity of space activities (in terms of the number of spacecraft launched and the number of spacecraft launched), Russia has been occupying a leading position over the past few years. According to the volume of funding for civil space activities, according to recent years, Russia ranks sixth in the world.

Currently, the Roscosmos agency has concluded intergovernmental agreements on cooperation in space activities with 19 countries; among them are the USA, Japan, India, Brazil, Sweden, Argentina and countries that are members of the European Space Agency (ESA).

In March 2010, France ordered 14 Soyuz launch vehicles from Russia for $1 billion. In November 2011, in light of the successful cooperation between the Russian Federation and France during the preparation and launch of the launch vehicle from the French Kourou cosmodrome, it became known that a contract had been signed for construction of 21 Soyuz launch vehicles, estimated cost of at least 32 billion rubles. (also, in addition to this contract, Russian and French specialists will develop a new generation launch vehicle).

Microelectronics. According to estimates by the companies Rusnano and Sistema, the volume of the Russian microelectronics market in 2010 amounted to $1.5 billion. This is less than 1% of the world (estimated at $280 billion). If the Russian market is not regulated, by 2015 it will grow to $2.84 billion, and if import substitution is stimulated, to $9.93 billion, AFK and Rusnano predict. According to market participants, the share of Russian chipmakers in the industrial microelectronics segment is about 30-50%, and about 5% in the consumer electrical goods segment.

In 2008, the growth rate of microelectronics in Russia was about 25%, and in 2009 - about 15%, which exceeded the growth rate of other sectors of Russian industry. In February 2010, Deputy Minister of Industry and Trade of Russia Yuri Borisov said that the implementation of the Russian government's strategy in the field of microelectronics has reduced the technological gap between Russian manufacturers and Western manufacturers to 5 years (until 2007, this gap was estimated at 20-25 years).

The Russian group of enterprises "Angstrem" and the company "Mikron" are one of the largest manufacturers of integrated circuits in Eastern Europe. About 20% of Mikron's products are exported.

In October 2009, the SITRONICS-Nano company was established to work on a project to create the production of 90 nm integrated circuits in Russia. Sitronics-nano is completing the construction of a factory for the production of such microchips, which should begin operating in 2011. Such chips can be used to produce SIM cards, digital set-top boxes, Glonass receivers, etc. The cost of the project will be 16.5 billion rubles. By the end of 2010, Russia began production of chips using 90 nm technology, used, in particular, in Russian-made mobile phones. In 2011, it is also planned to begin production of chips using the 45-65 nm process.

There are plans to create a single innovation center for research and development, an analogue of “Silicon Valley” in the United States, a characteristic feature of which is a high density of high-tech companies. The location of the future center should be determined in the near future. Presidential aide Arkady Dvorkovich warned against comparing the future innovation center with the well-known computer technology center in the United States. According to him, “direct comparison is not suitable here,” “in the future Russian center there will not be such a focus on one area, in particular, computer technology.”

Oil refining industry. There are 30 large oil refineries in Russia with a total oil refining capacity of 261.6 million tons, as well as 80 mini-refineries with a total refining capacity of 11.3 million tons. The average capacity of Russian refineries is 9.1 million tons.

During the period of economic reforms in the 1990s, the oil refining and petrochemical industries experienced a significant reduction in production volume. Due to a sharp reduction in domestic oil consumption, with a total primary processing capacity of 296 million tons per year, in 2000, 168.7 million tons were actually processed, that is, the utilization of oil refineries fell to 49.8%. This led to a low depth of oil refining and low quality of produced petroleum products. The depth of oil refining in 1999 averaged 67.4% in Russia, and only at the Omsk Refinery it reached 81.5%, approaching the standards of Western European countries and the United States.

In recent years, an encouraging trend has emerged. A sign of an improving situation is, in particular, a significant increase in investment in oil refining. Thus, in 2006 they grew by 11.7%, amounting to 40 billion rubles. Domestic demand for petroleum products is also growing. From 2004 to 2008, the total volume of oil refining increased from 194 to 236 million tons, and the volume of refining in these years grew at a faster pace than the volume of production. If in 2004 42.3% of oil produced in Russia was processed, then by 2008 this figure was 48.2%. The depth of oil refining for the period from 2005 to 2006 increased from 67.6 to 71.3%. In recent years, a number of refineries have been actively constructing deep oil refining complexes.

In 2008, Russia produced 36 million tons of motor gasoline, 69 million tons of diesel fuel, and 64 million tons of heating oil. By 2012, with state support, it is planned to build the largest oil refinery in Russia at the end point of the Eastern Siberia - Pacific Ocean oil pipeline, the depth of oil refining will be 93%, which corresponds to the level achieved at US oil refineries.

Food industry. The industry includes about 50 thousand enterprises employing about 1.5 million people. The growth in production in the food industry for 2000-2008 amounted to 77%. The Baltika company is the largest Russian beer manufacturer, exporting its products to 46 countries.

The Russian company Cherkizovo is a large producer and processor of poultry and pork. In 2009, the company's revenue amounted to $1.02 billion. Currently, the company is constructing the largest agro-industrial complex in Russia in the Yeletsk district of the Lipetsk region.

There are about 80 tobacco enterprises in Russia, employing about 65 thousand workers. Leading companies in the tobacco industry: BAT Russia (Moscow), Liggett-Dukat CJSC (Moscow), Petro LLC (St. Petersburg), Reemtsma-Volga Tobacco Factory LLC (Volgograd).

In 2008, Russia produced 2.9 million tons of meat, 2.5 million tons of sausages, 3.7 million tons of fish food products, 2.5 million tons of vegetable oil, 120 thousand tons of tea, 50 million deciliters of grape wines , 1.14 billion deciliters of beer, 413 million deciliters of mineral waters. In 2009, $140 million worth of vodka was exported from Russia.

Agricultural engineering. Russian agricultural engineering enterprises: Rostselmash is one of the leaders in the global agricultural engineering industry. It accounts for 65% of the Russian agricultural machinery market and 17% of the global market for this equipment. In 2008, 11.2 thousand wheeled tractors, 8 thousand grain harvesters, and 803 forage harvesters were produced in Russia.

Railway engineering. Russian railway engineering enterprises: Transmashholding (consisting of 13 large enterprises), Tikhvin Freight Car Building Plant, Uralvagonzavod, Carriage Building Company of Mordovia, Vagonmash, Kaliningrad Freight Car Building Plant, Torzhok Freight Car Building Plant. In 2008, Russia produced 49 sections of mainline diesel locomotives, 259 mainline electric locomotives, 2.1 thousand mainline passenger cars, 42.7 thousand mainline freight cars.

A number of Russian railcar manufacturing enterprises are actively cooperating in the joint production and development of equipment for the railway industry with a number of foreign companies, including Alstom, Siemens, Starfire Engineering & Technologies, Nippon Sharyo Ltd, American Railcar Industries and Amsted Rail.

In May 2010, Russian Railways signed two contracts with Transmashholding for the supply of 200 passenger electric locomotives and 221 for freight transportation. The total contract value is over 2 billion euros. Passenger electric locomotives, developed in cooperation with the French Alstom, will be delivered in 2012-2020. Electric freight locomotives will be produced and supplied by Ural Locomotives LLC (a joint venture of the German Siemens and the Sinara group).

Light industry. Light industry is one of the most important sectors of the Russian economy. It includes 17 sub-sectors, 14 thousand enterprises. In 2008, 463 thousand people were employed in light industry, of which 75% were women. The share of light industry in the country's total production is less than 1.0%. There are 15 specialized research and design institutes operating in light industry. Many of the developments of these institutes meet and exceed world standards.

The main sub-sectors of light industry are: textile production (45% of industry output); clothing production, dressing and dyeing of fur (30%); production of leather, leather goods and footwear production (25%). The book value of fixed assets in light industry in 2008 was 26.6 billion rubles.

Light industry enterprises are located in almost all constituent entities of the Russian Federation. Among the Russian regions, the Ivanovo region especially stands out, in which light industry is the main industry.

The light industry of Russia in 2005 included about 14 thousand enterprises and organizations, of which 1,437 were large and medium-sized. 70% of production volume comes from the 300 largest enterprises. The share of products produced according to orders from law enforcement agencies was about 11% of the total output of light industry products.

Furniture industry. According to data for 2000, about 3 thousand enterprises with 116 thousand employees worked in the Russian furniture industry. The industry's production volume was $634 million. In 2008, 6.8 million chairs and armchairs, 470 thousand sofa beds, 5.6 million tables, 6.0 million wardrobes, and 1.4 million wooden beds were produced in Russia.

Chemical and pharmaceutical industry. The share of the chemical industry in the structure of Russia's GDP in 2006 was about 6%, in the structure of exports - about 5%, and almost 7% of fixed industrial assets were concentrated in the industry. In 2009, 3.1 million tons of ammonia worth $626 million, 814 thousand tons of methanol worth $156 million, 22 million tons of mineral fertilizers worth $5.6 billion, 702 thousand tons of synthetic rubber worth $1.2 billion were exported .

At the 2010 APEC summit, Russia, Japan and China signed a contract for the construction of a plant for the production of urea fertilizers in Tatarstan with a total cost of $1 billion, commissioning is scheduled for 2015. The Russian pharmaceutical market is one of the most growing in the world. In 2008, sales on it amounted to about 360 billion rubles. The Russian pharmaceutical industry provides approximately 70% of Russian healthcare.

At the beginning of 2008, there were about 350 enterprises in the pharmaceutical industry that had licenses to produce drugs. The 10 largest factories produce more than 30% of the drugs produced in Russia. In 2007, the volume of exports of medicines from Russia amounted to about 6 billion rubles.

Negotiations are underway between the Group of Nanotechnologies (Rusnano) and British partners to create a large pharmaceutical company to create innovative pharmaceuticals. Project volume: $900 million. Optical-mechanical industry. The LOMO company is the largest Russian manufacturer of optical-mechanical and optical-electronic devices.

The Ural Optical-Mechanical Plant production association named after E. S. Yalamov is one of the largest Russian enterprises for the development and production of optical-electronic devices for military and civil purposes.

Nanotechnological production. In 2007, the Russian Nanotechnology Corporation was created, the purpose of which is to implement state policy in the field of nanotechnology, develop innovative infrastructure in the field of nanotechnology, implement projects for the creation of promising nanotechnologies and nanoindustry. On May 4, 2008, the Russian government adopted the Nanoindustry Development Program in the Russian Federation until 2015 of the year.

On April 26, 2010, a plant for the production of monolithic carbide tools with a multilayer nanostructured coating was opened in Rybinsk. This is the first nanotechnological production in Russia. The Russian Nanotechnology Corporation spent about 500 million rubles to finance this project. The head of the Russian scientific center Kurchatov Institute, Mikhail Kovalchuk, said: “Rusnano in the Rybinsk project played a very important role in the chain between the scientific organization, the funding body and the final production. We created intellectual property with budget money, and then, with the help of Rusnano, we commercialized it and legally sold a license to use it to manufacturers. Thus, thanks to this state corporation, our technology was turned into a commercial product.”

As of the beginning of June 2010, the supervisory board of the Russian Nanotechnology Corporation approved the financing of 76 industrial projects that are being implemented in 27 Russian regions. The total investment in them is about $8 billion, including the share of Rusnano - about $3.5 billion. By mid-May 2010, Rusnano received 1,607 applications for financing projects in the field of nanoindustry. Of these, 920 applications had been rejected by this time, 321 projects were undergoing scientific, technical and investment examination, and 290 were under consideration by the scientific, technical council and the investment policy council.

Ferrous metallurgy. The share of ferrous metallurgy in Russia's industrial production is about 10%. The ferrous metallurgy industry includes more than 1.5 thousand enterprises and organizations, 70% of them are city-forming, the number of employees is more than 660 thousand people.

More than 80% of the industrial production of ferrous metallurgy in Russia falls on 9 large companies: EvrazHolding, Severstal, Novolipetsk Iron and Steel Works, Magnitogorsk Iron and Steel Works, Management Company Metalloinvest, Mechel, Pipe Metallurgical Company, "United Metallurgical Company", "Chelyabinsk Pipe Rolling Plant Group".

The production volumes of the main types of ferrous metallurgy products in 2006 exceeded those of the early 1990s. In 2000-2007, the production volumes of steel and alloys increased, which was due to the rapid development of modern advanced methods, in particular, electric steelmaking. In 2007, the production of rolled ferrous metals amounted to 59.6 million tons. As of 2008, Russia ranked 4th in the world in steel production (72 million tons per year) and 3rd in the world in exports of steel products (27.6 million tons per year).

From 2000 to 2007, pipe production in Russia increased 2.7 times. In recent years, about $8 billion has been invested in the modernization of the Russian pipe industry, the production of new types of products has been mastered, and quality has improved. By 2010, about 40% of pipes in Russia were produced using new equipment.

Non-ferrous metallurgy. According to 2010 data, the share of non-ferrous metallurgy in Russian GDP is 2.6%, in industrial production - 10.2%.

Russian producers of non-ferrous metals:

1.Russian aluminum is the world's largest producer of aluminum and alumina.

2. Norilsk Nickel is the world's largest producer of nickel and palladium.

3. VSMPO-Avisma is the world's largest titanium manufacturer.

4.Novosibirsk Tin Plant is the only producer of tin and its alloys in the CIS.

5.Gaisky ZOTsM Alloy (Gai)

6.Ural Mining and Metallurgical Company (Verkhnyaya Pyshma)

7. Solders and alloys plant (Ryazan)

8.Kamensk-Uralsky non-ferrous metals processing plant (Kamensk-Uralsky)

9. Kamensk-Ural Metallurgical Plant (Kamensk-Uralsky)

10.Kirovsky ZOTsM (Kirov)

11. Kolchuginsky ZOTsM (Kolchugino)

12.Red Vyborgets (St. Petersburg)

13.Moscow ZOTsM

14. Nadvoitsky aluminum smelter (Karelia)

15.Novgorod Metallurgical Plant (Veliky Novgorod)

16. Novorossiysk Non-Ferrous Metals Plant

17. Stupino Metallurgical Company (Stupino)

18.Electrozinc (Vladikavkaz)

19.Ural Mining and Metallurgical Company (Revda)

20.Ryaztsvetmet (Ryazan)

Electric power industry of Russia

On the territory of Russia there are integrated energy systems of the Center, North-West, Volga region, North Caucasus, Urals, Siberia and the Far East. Electricity is produced at thermal, nuclear and hydroelectric power plants.

At the end of 2009, Russia produced 1.04 trillion kWh of electricity (4th place in the world). In the same year, 17.9 billion kWh of electricity worth $789 million was exported from Russia. In 2010, 19.0 billion kWh of electricity was exported worth $1.03 billion.

As of 2009, Russia has 15 operating, under construction, and suspended construction hydraulic power plants of over 1,000 MW and more than a hundred hydroelectric power plants of smaller capacity. Nuclear power. At the beginning of 2010, Russia had 16% of the market for services for the construction and operation of nuclear power plants in the world. According to an RBC study from July 2010, today Atomstroyexport, whose main shareholder is the state corporation Rosatom, retains 20% of the global nuclear power plant construction market. This share may increase to 25%. As of March 2010, Rosatom is building 10 nuclear power units in Russia and 5 abroad.

In Russia, 10 nuclear power plants have been built, with 31 power units in operation. Since 1991, 3 new units have been put into operation. At the beginning of 2006, three more were under construction.

In 2007, Russian nuclear power plants generated 159.79 billion kWh of electricity, which amounted to 15.7% of the country's total output. Over 4% of the electricity produced in the European part of Russia and the Urals comes from nuclear power plants. In 2009, the increase in uranium production was 25% compared to 2008.

After the launch of the Volgodonsk NPP power unit in 2010, Russian Prime Minister V.V. Putin announced plans to increase nuclear generation in Russia’s overall energy balance from 16% to 20-30%.

Currently, Rosatom owns 40% of the world market for uranium enrichment services and 17% of the market for the supply of nuclear fuel for nuclear power plants. Russia has large complex contracts in the field of nuclear energy with India, Bangladesh, Armenia, Venezuela, China, Vietnam, Iran, Turkey, Bulgaria, Belarus and a number of Central European countries. Complex contracts in the design and construction of nuclear power units, as well as in fuel supplies, are likely with Argentina, Nigeria, Kazakhstan, Ukraine, and Qatar. Negotiations are underway on joint projects to develop uranium deposits with Mongolia.

Russia has a large national program to develop nuclear energy, including the construction of 28 nuclear reactors in the coming years, in addition to the 30 already built during the Soviet period. Thus, the commissioning of the first and second power units of Novovoronezh NPP-2 should take place in 2013-2015.

The Russian Federal Atomic Energy Agency is conducting a project that has no analogues in the world to create unique low-power floating nuclear power plants. In 2010, the deputy head of the Rosenergoatom concern said that work on the construction of the first copy was going on schedule. The station will be ready at the end of 2012, and will go into operation in 2013.

Wind power. The technical potential of Russian wind energy is estimated at over 50,000 billion kWh/year. The economic potential is approximately 260 billion kWh/year, that is, about 30% of electricity production by all power plants in Russia. The installed capacity of wind power plants in the country as of 2006 is about 15 MW.

One of the largest wind power plants in Russia (5.1 MW) is located near the village of Kulikovo, Zelenograd district, Kaliningrad region. Its average annual output is about 6 million kWh.

All Russian geothermal power plants are located in Kamchatka and the Kuril Islands; the total electrical potential of steam-water thermals in Kamchatka alone is estimated at 1 GW of operating electrical power. The Russian potential has been realized only in the amount of not much more than 80 MW of installed capacity (2009) and about 450 million kWh of annual output (2009).

The volume of electricity production in 2012 amounted to 1 trillion 64 billion kWh, which is 1.1% higher than the result of the previous year; The volume of thermal energy output reached 1 billion 312 million Gcal - a decrease of 1% year on year.

Agriculture of Russia

The volume of gross value added in agriculture, hunting and forestry in Russia is 1.53 trillion rubles (2009). According to Rosstat, in 2007 the total gross agricultural product of Russia amounted to 2099.6 billion rubles, of which crop production (agriculture) accounted for 1174.9 billion rubles. (55.96%), and for livestock farming - 924.7 billion rubles. (44.04%). By category of producers, personal subsidiary plots produced the most products (48.75% or worth 1023.6 billion rubles); in second place are agricultural organizations (collective farms, state farms, etc.), which contributed 43.76% or 918.7 billion rubles; Farms produced the least amount - 7.49% or in the amount of 157.3 billion rubles. From 1999 to 2008, the Russian agricultural production index increased by 55%. In 2008, the output of Russian agriculture amounted to 87% of the 1990 level, crop production - approximately 130%, livestock production - approximately 60%.

The volume of loans in the Russian agro-industrial complex amounted to 615 billion rubles in 2007 (of which subsidized loans - 285 billion rubles), in 2008 - 715 billion rubles (of which subsidized loans - 310 billion rubles). In 2008, the volume of Russian federal budget expenditures on agriculture amounted to 138.3 billion rubles. The share of agriculture in the federal budget expenditures increased from 0.7% in 2005 to 1.97% in 2008.

In March 2010, the heads of the agricultural ministries of Brazil, Russia, India and China (BRIC) signed a declaration of cooperation, which implies the implementation of four areas of multilateral cooperation: in particular, an increase in mutual agricultural trade between countries, with the creation of an agricultural information base of the BRIC countries.

Harvesting of grain crops in Russia in 1990-2009, million tons. Russia contains 10% of all arable land in the world. More than 4/5 of arable land in Russia falls on the Central Volga region, the Northern Caucasus, the Urals and Western Siberia. Main agricultural crops: grains, sugar beets, sunflowers, potatoes, flax. In 2008, Russia harvested 108 million tons of grain crops, the largest harvest since 1990. At the end of 2009, 97 million tons of grain were harvested. Over the same year, 16.8 million tons of wheat worth $2.7 billion were exported from Russia. According to data at the beginning of 2010, Russia is in third place in the world in grain exports (after the United States and the European Union) and in fourth place. 1st place in the world in wheat exports (after the USA, the European Union and Canada). Nicolas Fragno, manager of Amundi Funds Global Agriculture, predicts that in 2010 Russia may come close to the European Union in grain exports.

In April 2010, the newspaper Le Figaro wrote that wheat production in Russia could exceed the yield in the United States for the first time in history. According to the newspaper, this figure is the result of a new Russian agricultural strategy. In 2008, Russia produced 29.1 million tons of sugar beets, 28.9 million tons of potatoes, 13.0 million tons of vegetables, 7.3 million tons of sunflowers.

In Russia, meat-dairy and meat-wool livestock farming is developed. In 2000-2008, Russia experienced a constant increase in annual meat production volumes. In 2008, 2.9 million tons were produced, which is 2.6 times more than in 1999. From 2002 to 2008, chicken production in Russia tripled, reaching 2 million tons per year. According to the forecast of the UN Food Organization, in 2010 the volume of chicken production will reach 2.8 million tons. According to Poultry International magazine, the growth in chicken meat production in Russia is at least partially explained by the actions of the state, which in 2009 allocated preferential loans to chicken producers amounting to more than $4 billion.

As of 2010, Russia ranks 7th in the world in terms of chicken meat production.] Poultry International predicts that by 2012 Russia can be almost completely self-sufficient in chicken meat, reducing the share of imports to 10% of consumption. In 2008, Russia produced 32.4 million tons of milk and 51.8 million tons of wool.

In Russia, quotas for imports of poultry meat into the country are being consistently reduced: in 2009 it amounted to about 950 thousand tons, in 2010 - a little over 700 thousand tons, for 2011 it was initially planned to set it at the level of 600 thousand. t, but was determined twice as low - 350 thousand tons.

Foreign trade of Russia

Russia's foreign trade turnover in 2012 amounted to $837.2 billion (+ 1.8%), while turnover with non-CIS countries reached $719.5 billion, with CIS countries - $117.7 billion. Russia's trade surplus with non-CIS countries abroad last year amounted to $175.1 billion (a decrease of $1.3 billion compared to 2011), with the CIS countries - $37.1 billion (an increase of $2.5 billion).

Exports from Russia in 2012 amounted to $524.7 billion (+ 1.6%). At the same time, the share of non-CIS countries accounted for 85.2% of exports, and the share of CIS countries - 14.8%. In the commodity structure of exports to the CIS countries in 2012. the share of fuel and energy goods amounted to 55.4% of total exports to these countries (in 2011 - 55.3%).

Revenues from the export of petroleum products from the Russian Federation in 2012. increased by 12% - to $103.43 billion from $91.31 billion in 2011. This is stated in the materials of the Federal Customs Service (FCS) of the Russian Federation. In physical terms, exports of petroleum products increased by 10.5% - to 137.94 million tons from 124.9 million tons in 2011.

Revenues from the export of motor gasoline in 2012 decreased by 4% - to $2.53 billion from $2.64 billion. Exports in physical terms increased by 4.5% - to 3.2 million tons from 3.06 million tons.

Revenues from diesel fuel exports increased by 16%, to $36.7 billion from $31.7 billion. In physical terms, exports of this type of fuel increased by 4%, to 36.74 million tons from 35.4 million tons.

Revenues from the export of liquid fuels in 2012 compared to 2011 increased by 12.5% ​​- to $48.95 billion from $43.5 billion. In physical terms, exports increased by 6% - to 75.95 million tons from 71.72 million tons.

According to the Ministry of Energy, primary processing of crude oil at Russian refineries in 2012. increased compared to 2011 by 4.5% - to 265 million 688 thousand tons. Production of motor gasoline in the Russian Federation in 2012. increased by 5.2% - to 38.141 million tons; diesel fuel - decreased by 0.1% - to 69.6 million tons; heating oil - increased by 5.4% - to 74.1 million tons; jet fuel - increased by 10.3% - to 10.029 million tons. Russia's income from coal exports in 2012. increased by 14.4% - to $13.015 billion. Imports to Russia last year amounted to $312.5 billion (+ 2.2%). At the same time, the share of non-CIS countries accounted for 87.0% of imports, and the share of CIS countries - 13%.

The basis of Russian exports to non-CIS countries in 2012 were fuel and energy products, the share of which in exports was 73% versus 72.7% in 2011.

Last year, imports from non-CIS countries were dominated by machinery and equipment, accounting for 52.1% of imports compared to 51% in 2011.

EU countries occupy 49% of Russian trade turnover (47.9% in 2011), CIS countries - 14.1% (15.1%), EurAsEC countries - 7.3% (7.6%), APEC countries - 24.0% (23.8%), countries of the Customs Union - 6.9% (7.3%).

Russia's main trading partners in 2012 were China, with trade turnover amounting to $87.5 billion (+ 5.1%), the Netherlands - $82.7 billion (+ 20.6%), Germany - $73.9 billion (+ 2 .8%), Italy - $45.8 billion (- 0.5%), Turkey - $34.2 billion (- 7.9%), Japan - $32.2 billion (- 5.3%), USA - $28 .3 billion (- 8.8%), Poland - $27.4 billion (- 2.4%), Republic of Korea - $24.9 billion (- 0.2%), France - $24.3 billion (- 13. 6%).

Foreign investment in Russia

As of March 2010, the total volume of accumulated foreign investment in the Russian economy was $265.8 billion. As of December 31, 2010, Russia is in 17th place in the world in terms of the volume of accumulated foreign investment. According to the results of a survey conducted in 2003 by the consulting company A.T. Kearney, Russia is among the ten most attractive countries for corporate investors.

In 2005, Russia received $53.65 billion of foreign investment. The leaders were Luxembourg ($13.8 billion), the Netherlands ($8.9 billion), Great Britain ($8.6 billion), Cyprus ($5.1 billion) and Germany ($3 billion).

According to the Russian Ministry of Finance, the net inflow of capital into the country at the end of 2007 was expected to be $80 billion. At the same time, the Ministry of Finance significantly exceeded its initial forecast (approximately $40 billion), calculated based on data on capital inflows for the previous 2006, when this figure reached $41 billion mark

In September 2008, UNCTAD published a report according to which Russia is in fourth place on the list of countries that multinational corporations consider the most attractive places for future foreign investment. As noted in the report, the investment attractiveness of Russia has increased significantly in comparison with the data of the UNCTAD report of 2007. At the end of 2008, the influx of foreign direct investment into Russia amounted to $70 billion - 5th place among countries in the world.

In March 2010 in Paris, Russian President Dmitry Medvedev, at a meeting with representatives of French and Russian business circles, announced that the volume of accumulated French investments in Russia exceeds $10 billion: “From 2003 to 2008, that is, in the pre-crisis year, our trade turnover increased by 5 times. Indeed, we already have a very decent amount of accumulated French investment. Moreover, about half of them are investments not in the raw materials industry, but in processing.”

According to Boeing's press release for the summer of 2009, over the next 30 years, Boeing's business development plans in the Russian Federation amount to about $27 billion. They will be invested in a cooperation program with Russian partners in the field of titanium production, the design and development of civil aircraft, as well as purchasing various services and materials.

In June 2010, a report by the British auditing company Ernst & Young noted that in 2009 Russia entered the top 5 countries in terms of the number of new investment projects attracted. According to the report, there is a growing interest of large and medium-sized European companies in the Russian market. JSC Russian Railways (RZD) placed its debut issue of Eurobonds for $1.5 billion. At the St. Petersburg International Economic Forum SPIEF-2010, the total volume of investment agreements concluded exceeded 15 billion euros.

Prospects for the development of the Russian economy

The European Commission expects the Russian economy to grow by 2.0-2.5% in 2014. These figures are significantly lower than those predicted at the beginning of 2013 - 3.5-3.7%.

According to EC experts, despite the fact that Russia quickly recovered from the sharp economic downturn in 2009, the global crisis also affected its condition. Thus, in 2012, the Russian Federation’s GDP grew by only 3.4% compared to 4.3% in 2011. “Looking ahead, we must first answer the question of whether Russia will be able to resist this trend without raising prices for goods. In 2012, Russia's budget deficit amounted to only 0.1% of GDP, but the non-oil budget deficit increased significantly and amounted to 10.6% of GDP,” the report says. In view of these weak indicators, the European Commission believes that it will be difficult for Russia to achieve the projected GDP indicators in 2014. According to European economists, this will require the Russian authorities to take measures to significantly boost the economy.

The head of the Central Bank of Russia, Elvira Nabiullina, said that the Russian economy can grow by 3-4% per year with the help of various stimulus measures, even if the oil price is not a driver. According to her, first of all we need to start by stimulating domestic demand. However, the end of 2013 showed that it will be extremely difficult for Russia to achieve even such growth rates without carrying out structural reforms and attracting investments.

With the collapse of the USSR, the country's new leadership began to take measures to radically change the economic sphere of society. The main innovation is large-scale privatization. By 1995, many owners had appeared in the state, holding a large number of enterprises in their hands.

In 2006, private owners already made up the majority of the country. Only 20% of the interest remained in the hands of the Government. Privatization of property continues to this day.

Historians distinguish two stages in the development of the Russian economy. The first is allocated to the years 1990-1998. These years have seen radical changes in the economic sphere, rapid rises in prices, a drop in investment, an increase in debt, and an increase in the budget deficit.

Experts believe that mistakes made during economic modernization are associated with a lack of experience in large-scale transformations and the inability of management to work effectively in market conditions. Entrepreneurship developed poorly, and government bodies were highly corrupt. All this created the conditions for the development of a severe crisis in 1998.

The second stage of economic development begins with the recovery from the crisis in 1999. Since that time, the country began to gradually overcome the economic downturn. The policy became tougher and more consistent, which helped ensure the stability of the federal budget, develop entrepreneurship in a market economy, and improve the financial situation of the population.

Now Russia is actively engaged in economic policy. All economic structures are quite developed. The country has strengthened its position in the interstate space. Modern Russia is directing all its efforts to the development of an innovative, high-tech economy.

Economic zones and leading industries

Each subject of the Russian Federation has its own pros and cons of economic development. The level of economy of individual territories depends on many factors, for example, the availability of raw materials and labor. Currently, Russia is divided into two main economic zones:

1. Western. It includes the European part of the state and the Urals. The zone is characterized by the presence of a huge amount of industrial production, but a lack of raw materials and resources.
2. Eastern. It consists of Siberia and the Far East. The economy in this zone is poorly developed, despite the fact that there are many resources for its development.

The economy of any country has its own structure. The Russian economic sphere consists of many industries. The leading role in modern times is assigned to industry. Within this industry, the extractive industries have achieved great success.

In addition to industry, trade, agriculture, construction, and transport are well developed. The non-productive sector of the economy is not left out either.

Disadvantages and problems of the economy

The economy throughout the existence of the Russian Federation was not ideal. There have always been, are and will be shortcomings that hinder the full development of this area.

The following negative aspects of the modern economy are noted:

• Weak influence of the state on the development of the private sector.
• Pronounced corruption of government agencies and illegality of their actions.
• Excessive monopolization, leading to rising prices and inflation.
• Unreasonable expenditures of budget funds by enterprises, banks and other institutions.
• Poor control in the tax area.

The problems listed are not exhaustive. This is just the main list of shortcomings of the Russian economy, which hinders the normal development of this area and the growth of the well-being of the country's population.

Many experts are optimistic about 2017, believing that the Russian economy will experience inevitable growth. There is every reason for such forecasts. Rising oil prices, the transition to a floating ruble exchange rate, and the strengthening of the banking system contributed to the restoration of confidence in the economy as a whole. Thus, the Russian economy today has good growth prospects, but the pace of this growth may be limited by the lack of structural reforms.

According to the latest IMF data, at the end of 2015, the Russian economy ranked 6th in the world in terms of GDP in terms of purchasing power parity. The figure was $3.7 trillion.

At the same time, forecasts for 2017 inspire optimism. The European Commission has improved its forecast for Russian economic growth in 2017 from 0.6% to 0.8%. In 2018, the European Commission expects the Russian economy to grow by 1.1%.

Experts surveyed by Bloomberg believe that in 2017 Russia's GDP growth will be 1.1%, and in 2018 - already 1.5%. World Bank analysts expect Russian economic growth to reach 1.5% in 2017 and 1.7% in 2018.

Share this article with your friends

This publication is an updated version of Andrey Movchan’s work “Briefly about the main things: the Russian economy in the 21st century.”

In the 25 years since the collapse of the USSR, the state of the Russian economy and methods of its transformation have been the subject of a large amount of speculation and superficial judgments both in Russia and abroad. This “war of delusions” was one of the reasons that Russia not only missed 25 years and several unique opportunities for economic and technological breakthrough, but also returned in its political and economic structure to a state close to the beginning of the 20th century. The main problem was the extreme simplification of the view of the status and prospects of the Russian economy, the naivety and primitiveness of most of the approaches to management and analysis of the situation proposed during these years. The real picture has always been much more complex, and it can only be seen by fully understanding the rather complex interweaving of external factors and internal interests.

Features of the Russian economy over the past 25 years

. By the end of the 80s of the 20th century, the USSR economy finally lost control - due to internal imbalance and inflexibility of planned management methods under the socialist property system. At the same time, Russia inherited from the USSR not only huge mineral resources, but also a developed infrastructure and a large volume of inefficient but functioning industrial assets.

After 1991, the system of functioning of the economy changed rapidly, but democratic institutions were not formed.

In the 21st century, Russia has experienced the classic “Dutch disease,” aggravated by the centralization of power and property and the absence of democratic institutions. However, while hydrocarbon prices were high, the country managed to accumulate enough reserves so that today's drop in oil prices and the country's relative international isolation did not cause an economic collapse.

All major economic factors and even available management resources today either negatively affect the Russian economy or simply cannot ensure its growth.

Foreign policy factors, primarily sanctions, are secondary, insignificant and do not have a significant negative impact on the economy, despite the fact that the authorities in Russia actively use them as an excuse for economic problems.

Main conclusions and forecasts

. In 2017, one should not expect significant surprises from the Russian economy, either negative or positive. In the basic scenario, neither catastrophic economic nor radical social processes are visible.

The weakest link in the coming years will be the Russian banking sector.

There are other “weak spots” where catastrophic changes can occur.

The Russian government decided to respond to economic challenges not with an attempt to reform the economy, but with a course to maintain the level of the budget deficit in the short term at an acceptable level, including at the expense of the long-term perspective. The measures are mainly aimed at increasing tax revenues and reducing budget obligations. This strategy is only at the beginning of its natural development path: 2017 and 2018 will most likely be marked by a targeted increase in taxes and fees and a gentle reduction in budget spending. But from 2019, tax growth will accelerate, an active increase in domestic public debt and limited emission funding of the budget will begin.

It is very likely that the government will undertake a significant emission program with a parallel closure of cross-border capital movements, restrictions on foreign exchange transactions and price controls. However, this will not happen before the 2018 presidential election and is unlikely to happen until 2022-2024.

The Russian economy is not unique - the “Dutch disease” it experienced has quite typical symptoms and consequences.

Russia is still far from economic collapse and loss of control, but is slowly moving towards them. If catastrophic scenarios associated with management errors or external factors can be avoided, Russia has an economic safety margin for a period of six to ten years or more; then the question will be about the need for urgent, decisive changes to preserve the integrity and controllability of the country. However, judging by public sentiment, such changes are likely to include tightening controls, further nationalization, closing economic space and simplifying the economic structure.

INTRODUCTION CAN YOU TRUST YOUR EYES?

Quantitative assessment of the indicators of the Russian economy depends on the conventionality of the systems for changing various parameters and the accuracy of the data we have. Data before 1991 are generally difficult to consider significant, since statistics from the USSR were formed according to completely different principles from modern ones, measuring in an artificially valued currency and in the economy of regulated prices. After 1991, statistics became more adequate, but significant questions still remained.

The main issue in assessing Russia's GDP has always been the share of the shadow economy, and not only in direct form (unofficially recorded earnings and profits).

In particular, the statistics were greatly distorted by the practice of artificial pricing—inflating prices for government supplies and contracts. For construction contracts, overpricing was and is, according to various sources, from 20 to 50%. For the supply of complex technological and consumer equipment - up to 200% of the real price. The practice of private distortion of prices for imported goods in order to pay lower duties, for services provided in order to reduce VAT, for exported goods in order to reduce revenue and avoid paying income taxes, etc. was also very common.

The share of informal business in Russia in the 1990s, according to some estimates, exceeded the entire size of officially registered businesses. By 2013-2014, this share, according to official data, decreased to 10% of the economy. However, it is unknown how official measurements of informal businesses were taken. But in 2014, Rosstat announced that it had significantly revised its methodology and significantly increased the share of informal business in GDP. Thanks to this, as well as the inclusion of the Crimean economy in the calculation of GDP in 2014, according to official data, it even grew, although by less than one percent.

Indicators such as average household income (in general and by industry or region) are quite difficult to judge for the following reasons.

In Russia, due to prohibitive payroll taxes and taxation of wages and income starting from zero, most payments are disguised as other forms of financial transactions or are made from unaccounted cash. The share of cash turnover in retail trade in 2014 exceeded 80%, 30% of residents did not have bank cards, and the amount of cash rubles in circulation over the past 14 years has grown more than 45 times.

The assessment of average household income and the uniformity of its distribution is also influenced by the fact of mass fictitious employment of citizens.

It is not easy to assess the distribution of budget expenditures in Russia: more than 30% of these expenditures are classified. It is traditionally believed that classified budget items are used to finance the military-industrial complex and other law enforcement agencies. But there is indirect evidence that the range of their use is much wider.

Even reserves created by the government can be difficult to estimate: although their composition is published, many items are opaque, and some (such as money transferred to Vnesheconombank) are highly likely to represent non-performing loans.

The assessment of units of measurement also causes difficulties: for 2000–2015 (see below), the market exchange rate of the US dollar to the ruble fluctuated relative to the calculated inflation rate in the range from approximately 140 to 60%. If Russia’s GDP, for example, for 2013 had been converted into dollars not at the market rate, but at the calculated inflation rate, the amount of 2.1 trillion dollars would have turned into no more than 1.4 trillion. A consistent look at the events of the Russian economy, taking into account such volatility of the ruble relative to its fair value, should rather speak not of a fall in Russia’s GDP in 2015-2016, but of its inadequate overvaluation in 2005-2013 due to the revaluation of the ruble.

A big problem exists in Russia with the application of the purchasing power parity (PPP) coefficient to economic indicators. The problem is not only systemic, but also individual: in Russia, prices for utility services are significantly distorted, the variability of prices for the same goods and services in different regions reaches hundreds of percent, consumer baskets for different segments of the population, due to high stratification, have completely different compositions. Officially accepted PPP levels exceeding 300% are unlikely to adequately reflect comparative price levels in Russia and the United States. Suffice it to remember that more than half of Russians’ consumption is imported, fuel prices in Russia and the United States today are approximately the same, real estate prices are comparable, and for a whole range of consumer products (food, clothing, household items, household appliances, cars, etc.) ) prices in Russia for certain goods are higher than in the United States.

We will have to take into account all these costs of quantitative methods when analyzing the Russian economy. It must be remembered that the results of the analysis will only be as accurate as the data allows.

A GAS STATION IN A BOOM PERIOD: THE RUSSIAN ECONOMY IN 2000-2013

Over the past 15-16 years, the Russian economy has experienced the classic resource cycle and the “Dutch disease” - phenomena that are banal and well studied. By 2000, Russia arrived with an extremely high concentration of assets in state ownership and in the hands of a limited circle of private individuals, who received almost 100% of these assets from the state in exchange for controllability and loyalty.

After the conflict between the president and parliament in 1993, power almost completely passed into the hands of the president and his administration, making parliament at best an advisory body, and the parties represented in it loyal to the president in exchange for economic opportunities. At the same time, the country had not yet developed the institutions of an independent judiciary, the laws were still archaic, contradictory and ineffective, the protection of property rights, investments, protection from changes in legislation and other attributes of reducing the risks of entrepreneurs did not work. The country has just experienced a default on its domestic debt and a six-fold devaluation of its currency against the US dollar. Under these conditions, there was a high demand for reforms in society, which was supported by the authorities, who saw no other way out of the economic crisis.

Higher oil prices at the beginning of the century led to rapid growth in budget revenues and revenues from sectors engaged in the extraction, transportation and processing of natural resources, and allowed the authorities to refuse to stimulate the process of expanding the tax base through reforms.

The growth in the well-being of citizens, which was a consequence of the proliferation of oil revenues, quickly created both society and investors the illusion of the correctness and effectiveness of government policy.

On the other hand, thanks to the ability to control oil flows, the authorities consolidated indirect control over the hydrocarbon industry, banking business and, through them, over the entire economic and political life of the country. This had a negative impact on the development of any non-oil business, on the effectiveness of economic and budgetary decisions, and on the influx of investment into the country.

In fact, by 2008, 65-70% of Russia’s budget consisted directly or indirectly of revenues from hydrocarbon exports, and the correlation of GDP growth rates, federal budget revenues and the size of reserves with changes in oil prices reached 90-95% (see tables and graphs) . Against this background, the ruble turned out to be significantly overvalued due to the massive influx of petrodollars - in 2006-2007, its market rate exceeded the calculated inflation rate by 35% (see chart). The economic development of Russia was influenced by three negative factors:

Context

National pride instead of material wealth

The New York Times 12/26/2016

Russian Federation: politics harms the economy

Financial Times 12/25/2016

The Russian economy has not yet recovered

Financial Times 12/21/2016

Russia has lost its business jewel

03.01.2017

1. The authorities, in their desire to control financial flows15, unwittingly worsened the investment climate, refusing to protect the rights of investors and entrepreneurs and even discriminating against them. This led to a reduction in the flow of investment, an increase in the cost of money, a decrease in entrepreneurial activity and an ever-increasing loss of financial and human capital - more than $1 trillion was withdrawn from Russia, the best businessmen and professionals left the country.
2. In the very first years of rising oil prices, a decision was made at the government level to sterilize additional budget profits into reserves. This policy, which fully justified itself during the crises of 2008 and 2014-2015, creating an opportunity to mitigate budgetary consequences, nevertheless increased the cost of raising money for businesses. As a result, the attractiveness of investment decreased, and the formation of capital-intensive or slow-growing areas became almost impossible.
3. The inefficiency of the non-resource sectors of the economy, the low level of investment, the hypertrophied public sector and the overvalued ruble led by 2007–2009 to such a level of wealth stratification of the population that the government could no longer ignore it. In the face of a decline in its popularity, the authorities decided to take populist measures aimed at unreasonably increasing salaries in the public sector and social benefits. These measures, reflected in the so-called May presidential decrees, together with continued high taxes on companies and social charges on wage funds, sharply inflated production costs, making domestic production unprofitable.

As a result, against the backdrop of a general increase in income - due to the export of hydrocarbons and rapid growth in consumption - Russia degraded in almost all areas of the economy, never creating a competitive productive sphere. Hydrocarbon production accounts for up to 20% of Russian GDP; up to 30% - trade, hypertrophied due to huge import flows due to petrodollars; about 15% - domestic energy market and infrastructure; another 15% came from government projects; 9% was the share of the banking sector. And finally, no more than 10% of GDP by 2013 belonged to the sphere of independent services and non-resource production. By 2014, according to Rosstat, the share of imports in the field of capital goods in Russia reached 85−95%, in the field of consumer goods - 50−70%.

This was compounded by unreasonable social policy: the growth of household incomes outpaced the growth of GDP, even taking into account the oil component. In 2013, against the backdrop of peak oil prices, GDP growth was only 1.3%, with investment decreasing by 0.5%, capital construction by 1.5%, and exports by 0.8%. Against the backdrop of inflation of 6.5%, wages in real terms increased by 11.9%, trade by 4%, imports by 1.7%, and the cost of public utilities by 8%.

The budget has become an employer for 30% of the working population, taking on an exorbitant burden. Three pension reforms effectively failed due to the authorities' indecisiveness and unwillingness to abandon the socialist principles of social security, and as of 2015, the Russian Pension Fund deficit was about 15% of federal budget revenues (about 3% of GDP). In addition, the budget was overloaded with ambitious, ineffective projects and exaggerated defense and security expenditures, and budget expenditures increased greatly not only because money was spent inefficiently, but also because of high levels of corruption.

According to the Ministry of Finance of the Russian Federation, in 2014, revenues from foreign economic activity accounted for 38% of federal budget revenues. Since the share of non-commodity exports in 2014, according to Goskomstat, was about 8% (but at the same time, export duties on non-commodity goods were approximately two times lower), we can conclude that the federal budget was filled by 35.4% directly from the export of hydrocarbons .

In addition, taxes, fees, payments for natural resources, except for taxes on foreign economic activity, amounted to 20% of the budget, and excise taxes and other taxes on imported goods - 13%.

VAT received on the sale of imported goods, which, as indicated above, were purchased 92% with funds from the export of raw materials, amounted to another 17% of the budget, that is, 15% is VAT on goods purchased with proceeds from the export of raw materials.

Summarizing the above, we can conclude that 83.4% of federal budget revenues came from the extraction and export of raw materials.

But that's not all. A significant portion of income taxes is paid by companies extracting raw materials. A significant portion of income taxes is paid by employees of the mining and fuel and energy complexes. Up to 40% of personal income taxes are collected from employees of federal enterprises and budgetary organizations - these are funds returned to the budget. It is not surprising that the correlation between the price of oil and federal budget revenues is more than 98%.

As a result, after the fall in oil prices, Russia was left with an undiversified, quasi-monopolized economy that lacks both factors and resources for growth.

Pessimists' expectations are not met

In 2014, many European analysts and economists expected the Russian economy to collapse soon and were surprised when they were told that the “oil shock” had successfully passed. Two factors helped Russia get through the oil shock relatively smoothly.

First, over the years of high oil prices, Russia has accumulated sufficient reserves. Gold and foreign exchange reserves were three times higher than the expected volume of imports in 2015; enterprises have created a sufficient number of fixed assets; the population accumulated more than $250 billion in banks and, perhaps, no less in cash, formed a stock of durable goods, and the average living space per person more than doubled.

Secondly, economic relations in Russia have been liberalized to a large extent. In particular, cross-border capital movement was not limited; prices for basic goods and services and labor costs were determined on the basis of market balancing of supply and demand; The ruble exchange rate was set, although not without the participation of the Central Bank as the largest player, but still in the market and according to market rules.

During 2014–2015, the Russian economy contracted significantly, but this happened without catastrophic deformations. The only dangerous moment could be considered the currency crisis of early December 2014, when the Central Bank’s unreasonable decision overnight to announce a doubling of the refinancing rate provoked panic in the markets. However, the situation was corrected very quickly by fairly tough statements from the government, which committed itself to refrain from other drastic actions.

By the fall of 2016, Russia arrived with a 40% reduction in the dollar equivalent of GDP compared to 2013 (a drop of approximately 15% in real ruble prices). The fall in household income is, of course, unprecedented, but it has so far returned Russians to the income level of 2007, that is, during generally stable times. Per capita GDP in Russia in 2016 will be about 8.2 thousand dollars. In the list of countries, this is the end of the seventh decade, next to Turkey, Mexico and Suriname, and in terms of GDP according to PPP, Russia will be at the beginning of the sixth decade - together with Latvia, Kazakhstan, Chile, Argentina.

These indicators are modest, but still far from catastrophic: the zone of “color revolutions”, in which Egypt, Syria, Ukraine, Colombia, Indonesia, Tunisia and the vast majority of other countries that experienced periods of instability were located at moments of destabilization, begins at around 6 thousand. dollars per capita nominal GDP.

The most important stabilizing economic factor was the reduction in imports, which outpaced both the fall in household incomes and export earnings. The reason for this reduction was a catastrophic drop in demand, which occurred, in turn, due to the rapid devaluation of the ruble and the extremely pessimistic mood of all economic agents without exception. As a result, the foreign trade account and the external account maintained a positive balance, and when oil prices stabilized at new levels, this led to a stabilization of the ruble exchange rate and a decrease in inflation.

RUSSIAN ECONOMY: ARCHAIC, RISKS, REDUCTION OF LABOR RESOURCES

At the moment, the Russian economy is being slowed down by a number of factors.

In the area of ​​productive resources, Russia, which has historically underinvested in fixed capital, even today faces almost 85% capacity utilization. And this despite the fact that a significant part (according to some estimates, more than 40%) of the production capacity in Russia is technologically and physically outdated and cannot produce products that are competitive and consumed by the market. For example, over ten years the machine park in Russia has almost halved, and such a reduction is rarely explained by the retirement of old, low-power machines and the commissioning of new, higher power ones.

To grow the economy, it is necessary to rapidly capitalize production and create new capacities. The state does not have the funds for this: the budget deficit in 2016 will exceed 3% of GDP, and in 2017 or 2018 it will most likely reach 5%; State-owned companies do not have free resources. Private and foreign companies are not ready to invest in Russia today due to a crisis of confidence.

In terms of efficiency, Russia is far behind its global competitors. We are talking about efficiency, both energy and logistics. Accordingly, the competitiveness of manufactured goods decreases, and this is a barrier to increasing production and sales markets.

In the area of ​​productive forces, Russia is increasingly suffering from a shortage of labor resources; they are declining due to natural demographic reasons by 0.5% per year.

Most of the labor resources are involved in areas with zero or very low added value: in the civil service, law enforcement agencies, private security, trade, and the extremely inefficient banking sector. The remaining part does not cover the needs of the state. There is a catastrophic shortage, even with the current level of development of production and services, of engineering and technological personnel, qualified workers and, at the same time, effective managers and management specialists.

The Russian public utilities industry actually rested on the semi-legal exploitation of the labor of millions of migrants, including illegal ones. Until recently, remittances (money transfers sent by foreign workers to their homeland) from Russia were the No. 1 item of state income in Kyrgyzstan and No. 2 in Tajikistan, significant for Ukraine, Uzbekistan, Moldova, and Belarus. Today, due to the sharp fall of the ruble and the purchasing power of the population, the number of labor migrants in Russia is sharply declining. Utilities and all types of businesses that employ a large number of unskilled workers, including chain retailers, are beginning to experience labor shortages.

Inconsistent and illogical policies in the field of lawmaking and law enforcement, as well as in the field of economics and entrepreneurship, have demonstrated to the investment and business community both inside and outside Russia that the government is unreliable, hostile to entrepreneurs, maintains high levels of corruption, and is prone to prioritizing public interests, programs and businesses to the detriment of private ones.

The natural reaction was the refusal to invest in Russia - first in long-term, and then in any projects - and the departure of local entrepreneurs and investors. Over 16 years, the share of private business in GDP has decreased to 30%. External debt fell to below 50% of GDP due to stagnant investment. We can assume that the Russian economy lacks investment and entrepreneurial resources. And they will not appear at least until there is a radical change in the management paradigm.

The devaluation resource in Russia is not too large either. Of course, the devaluation played a positive role in supporting exporters, the budget and smoothing out the problems of a “hard landing” of the economy. However, it is difficult to expect a positive effect from it in terms of GDP growth. Firstly, potential GDP growth in Russia is tied almost entirely to domestic demand—export growth requires capital investments and technologies that do not exist. That is, this growth is measured in rubles and is practically not growing. Secondly, almost 100% of Russian production is, to a greater or lesser extent, dependent on the import of raw materials, components or equipment (dependence varies from 15 to 70-80%), and due to devaluation, the ruble cost of manufactured goods and even services increases significantly faster effective demand.

The influence of external factors - much ado about nothing

Among the important foreign policy factors influencing the Russian economy are, perhaps, only sanctions (and counter-sanctions). In everything that does not concern sanctions regimes, the foreign policy situation for Russian economic agents is quite favorable: Russia is a member of the WTO and other international economic organizations, places its reserves in the most liquid instruments and currencies, carries out foreign exchange and foreign trade transactions without restrictions, yields on sovereign debts are at low levels. At the same time, hostile economic actions towards Russia and Russian companies (market protection, anti-dumping duties, restrictions on free trade, etc.) today are no more than usual, and no more than in relation to other countries, including developed ones.

And the sanctions imposed by the US and the EU do not have a significant impact on the Russian economy today. It is important to understand the essence of the imposed sanctions: they prohibit borrowing from international markets by a limited number of Russian commercial organizations, prohibit the ownership of assets in a number of countries, the entry of a narrow circle of Russian citizens, and, finally, prohibit the transfer to Russia of a narrow list of technologies, mainly related to the effective development of subsoil and the creation of military equipment.

Restrictions on borrowing (even if we forget that the circle of organizations subject to them is very narrow) are unlikely to have an impact on a country that has been consistently reducing its external debt for several years. Nowadays, it is already less than twice as large as gold and foreign exchange reserves (and significantly less than the amount of gold and foreign exchange reserves and private assets in foreign currency not included in gold and foreign exchange reserves). Russia today does not need large-scale borrowing - most economic agents are reducing their balance sheets, not investing in development, and reducing turnover. Of course, financial sanctions, if they extend to a wider range of issuers and borrowers and include sovereign debt, could have a devastating impact on the economy in three to five years, when Russia runs out of capital reserves and is forced to raise funds in large quantities. But so far the scale of sanctions is not the same, and the situation may change dramatically in three to five years.

Of course, restrictions on technology transfer will have a negative impact on the state of the Russian economy in the long term. Limitations in exploration and production technologies (taking into account the fact that in Russia there are no such technologies, as well as the base for their creation) in five to seven years will have a negative impact on production levels and the cost of oil and gas. But today the effect of such a restriction is zero. The same can be said about military technologies - today Russia is actively increasing arms production and by 2015 brought the size of exports to the level of $14 billion per year (this is the third figure in the world after the United States and China), and sanctions have not yet affected this business.

Countersanctions, that is, self-restraint measures regarding food imports, which were introduced first against a number of countries (primarily the EU) and subsequently temporarily against Turkey, also do not have too much of an impact on the economy. “Import substitution” of prohibited items (that is, a proportional increase in the production of their exact analogues in Russia) did not occur, at least because as a result of the devaluation of the ruble, consumption decreased significantly - the loss in the volume of prohibited imports turned out to be insignificant in comparison. “Import substitution” goods have risen in price more than the average for everyday goods. However, due to falling demand and a total decline in the quality of domestic analogues (switching to surrogate ingredients, refusal to maintain technology, etc. in order to reduce costs and speed up the production process), neither excess production nor shortages appeared.

Perhaps the greatest negative impact on the Russian economy is Russia's unpredictable and inconsistent hostile behavior towards foreign economic institutions. Attempts to "autonomize" a country in vital areas are often the result of lobbying efforts by local players who operate poorly and on a limited scale, and by corrupt or short-sighted officials. This attempt results in significant expenditure of funds; to the fact that the result is a product that cannot be fully used as a replacement for modern technologies, and sometimes to a painful rejection of proven international technology. This really jeopardizes the security of Russia, but not because of a fictitious external threat, but because of a real one - the non-functionality of the substitute product.

2017 IS JUST A CONTINUATION OF THE TREND

The year 2016 was to some extent a surprise even for specialists who know the Russian economy well. The collapse of oil prices below $30 per barrel and their recovery to $50 per barrel by the fall did not have a significant impact on the short-term dynamics of economic indicators. Perhaps only the ruble to dollar exchange rate continued to behave as before, sensitively reacting to changes in the cost of oil. Despite the consistent decline in both oil and non-oil exports (which once again shows the importance of the Russian economy receiving petrodollars), the balance of the foreign trade account34 remained positive, primarily due to the rapid reduction in imports. The latter was caused by sharp cuts in government-funded programs, a halt in investment and, finally, a further fall in household incomes of about 8% year-on-year in real prices.

The economy in 2016 demonstrates the continuation of the process of slow gradual contraction, which, however, occurs without excesses. The industrial production index for 2016 is expected to average around 96% by 2015. And this is despite the fact that hydrocarbon production has already increased in physical terms by more than 3%, and the average oil price in 2016 promises to be higher than a year earlier.

Against the backdrop of pessimistic expectations of investors and entrepreneurs in Russia, the demand for money has decreased significantly - bank balances with the Central Bank of Russia have doubled over the nine months of 2016. With inflation around 6% per annum, the size of the M2 aggregate has increased by 11% since the beginning of 2016, apparently due to injections from the Central Bank into problem banks. The monetary base in Russia has continued to grow faster than inflation for at least eight years.

The Russian economy should also not expect big news in 2017. At least the commodity market promises to be more stable; oil, according to cautious forecasts, will remain in the range of 40-60 dollars per barrel, providing sufficient support for the budget.

One of the main risks of 2017 is the return of pent-up demand to the consumer and industrial markets. Indeed, in 2014–2015, consumers significantly reduced their consumption of durable goods due to negative expectations. Certain categories of goods still continue to experience the consequences of this decision. However, in general, in 2016, from January to September, imports fell by only 10% compared to 2015, while exports fell by 22%, and non-resource exports by 15%. Buyers are returning to markets using their savings because they need to replace depreciating goods - and this could be a warning sign. If exports continue to decline at a faster rate than imports, especially if imports begin to rise, Russia will face rising inflation and a depreciation of the ruble, despite stable oil prices.

It is reasonable to expect a continuation of the gradual and smooth decline in key economic indicators in 2017.

Inflation is unlikely to reach the 4% expected by the government (particularly due to the threat of a return of pent-up demand). However, due to the general depression, it is unlikely to go beyond 6-7%: the presence of reserve funds and the relatively high price of oil will allow the government to pursue a tight monetary policy.

The dollar exchange rate will, as before, follow oil and inflation.

GDP will continue to decline, as there are no growth drivers, business activity is declining, and the budget is not able to replace private capital in the field of investment.

The fall in key investment indicators will most likely be in the range of 10-20%, while long-term investments, including in capital construction, will fall more strongly. According to some forecasts, capital and especially housing construction may be reduced by up to 50%.

Thanks to the flexible exchange rate of the ruble, the Russian budget will, as in 2016, run a reasonable deficit. The government believes that it will not exceed 3% of GDP due to the emergence of “additional budget revenues,” mainly from privatization. However, the experience of selling Bashneft and a stake in Rosneft makes us skeptical about such forecasts. We are more likely to see a deficit of around 4% of GDP ($50 billion). The deficit will be covered mainly through the use of reserve funds. However, the government has already announced plans to begin large-scale borrowing on the domestic market, and 2017 will be indicative in terms of the market’s assessment of the risk of such debt and its cost.

The increase in the tax burden in 2017 will contribute to a further reduction in business activity and the withdrawal of an increasing share of medium and small businesses into the shadows. According to Rosstat, since the beginning of 2016, the number of small enterprises in Russia has decreased by 70 thousand (approximately 25%). Some of them, of course, simply retrained as medium and micro enterprises. But a large share of this decline is due to the closure of legal entities by entrepreneurs going out of business and going into the shadows. At the same time, since trade fades into the shadows much more easily than production, it will decline at a faster pace, losing the market to low-quality gray imports.

Against the backdrop of a general decline in production volumes in 2017 in Russia, we should expect a further rapid decline in product quality in a wide range of industries and an increase in the share of counterfeits and falsifications both in ingredients and in the final product. And not so much because of forced cost reductions by manufacturers, but because of weak control by regulators and a high level of regulatory corruption.

RUSSIAN BANKING SYSTEM: EMPTY INSIDE

The real capital of the Russian banking system is unknown. This is due to the fact that for many years the supervisory service of the Central Bank of Russia did everything to ensure that commercial and state banks hid the real state of affairs in their balance sheets and artificially inflated their capital. The change in the leadership of the supervisory service, which has just taken place, indirectly confirms the following fact: the banking system has reached the point after which continuing the policy of total window dressing will mean a quick disaster.

The efficiency of the banking system in Russia, even measured in terms of assets per employee, is several times lower than in the US and EU. The scale is significantly smaller, and the lending risks are an order of magnitude higher. And in 2017, these risks will grow: already in 2015, overdue consumer loans increased by 33%. As for commercial loans, the picture is unclear: it is still being retouched in every possible way to simulate the banks preserving capital. In particular, this leads to a deadlock with collateral for bad loans: banks do not sell collateral (today on the market they cost less than the sum of the loan volume and accrued interest) in order not to record losses. Pledged assets actually become ownerless: their owners no longer manage them, and banks are unable to do so.

The number of banks in Russia is decreasing by about 10% per year, today the number of operating ones is already below 500. At the same time, the concentration of assets is very high, the top 5 banks account for about 56% of the assets of the entire banking system, the top 50 - 88%. In order for the banking system to continue to serve the needs of the economy, a little more than 50 banks must be saved, and theoretically the failure of all the remaining banks would not have a significant impact (except perhaps the positive effect of some cleaning of the system and sterilization of the funds of unlucky depositors chasing higher interest rates).

The total capital of the banking system today formally does not exceed 9 trillion rubles. Theoretically, Russia can handle even a complete recapitalization of the system today, and in 2017, banks most likely will not need more than 1-1.5 trillion rubles for additional capitalization. Of course, 41 trillion rubles of loans issued - while we can expect a sharp increase in overdue debt and defaults - is a volume that the state will not be able to compensate. However, in the balance sheets of banks it is opposed by 44 trillion in deposits of organizations and individuals, and the state has in its arsenal of stabilization measures such effective means as, for example, the forced conversion of deposits and deposits in foreign currency into rubles at a low rate; freezing deposits with their transfer partly into bank capital, partly into long-term government obligations, etc.

But these are extreme measures, and we will not see them in 2017. Another thing is the more distant prospect - a couple of years after the presidential elections, when the reserves of strength of the banking system are largely exhausted, even with oil at $50 per barrel.

Perhaps a more serious risk than the systemic collapse of the banking system is the sudden collapse of one or two of the largest banking institutions, for example one or more banks from the top 10, for the market and regulators. And as a consequence - a chain reaction of loss of liquidity and inability to make payments, an attempt by depositors to escape from the entire system and its paralysis. The task of the Central Bank is, on the one hand, to try to predict and prevent such a situation, on the other hand, to instantly respond to it by injecting liquidity into the system. There is no reason yet to doubt the Central Bank’s ability to cope with the task, but the likelihood of an error or delay is still higher than zero.

BUDGET AND ECONOMY: THERE IS A MARK OF SAFETY, BUT IT IS NOT ETERNAL

The Russian economy is in the process of crisis contraction, archaization and gradually losing international competitiveness even in those areas in which it is still creating a competitive product. In recent years, it has also developed a serious monetary imbalance. The Russian budget has been in deficit for three years now, and there is a large amount of excess liquidity in the off-budget part. At the same time, the problems of the budget, which was previously almost entirely focused on revenues from natural resources and significantly inflated during the period of peak oil prices, do not look either unsolvable or catastrophic from the point of view of maintaining the stable functioning of the state.

At the end of 2015, per capita GDP in Russia corresponded in real prices to the level of 2006, the level of average wages corresponded to 2007. Given the expected economic performance for 2016, these indicators will retreat for another year - to the levels of 2005 and 2006, respectively. The situation with federal budget revenues will look approximately the same, which all years of the 21st century, measured in barrels of Brent oil, amounted to just over 4 billion barrels per year. And 2016, with expected revenues of 13 trillion rubles ($210 billion - 4 billion barrels of oil at a price of just over $50 per barrel), is no exception: Russian federal budget revenues in real terms will approximately coincide with revenues for 2003-2004 years when the real cost of oil was comparable. All these years were not characterized by significant problems either in the economy or in the budgetary sphere.

At this pace, Russia still has room to retreat: at the peak of the decline in 1999, when it seemed that one more step and the economy would collapse, per capita GDP was 21% lower, and average wages were 40% lower than 2016 levels. And budget revenues were significantly lower.

Another thing is that the state budget has its expenditure part, which is almost twice the corresponding part of the 1999-2000 budget. And if a decrease in average wages or household income forces recipients to adapt to negative changes and reduce consumption, balancing the balance of the external account and the value of the currency, then a potential reduction in budget expenditures significantly reduces earning opportunities for pressure groups that are accustomed to ineffective spending and ever-increasing intermediary and corruption income.

Pressure groups will fight to maintain their earnings, preventing the budget from being cut. This process is already noticeable: since the peak, consolidated budget expenditures have fallen in real terms by less than 20%, that is, significantly less than total consumption. This trend leads to stabilization and even growth of the budget deficit and an increase in the tax burden in Russia in the coming years, which, in turn, will further slow down economic activity in the country. Influence groups will seek to make up for losses from declining budget flows by increasing their control over state and non-state businesses; by increasing rents, consisting of bribes; imposed equity participation; non-market sales of goods and services and obtaining non-market competitive advantages.

We are already seeing how this process is taking place in the oil and gas field through nationalization, in the field of foreign trade - through the consolidation of flows through sanctions, in the field of technology - through the formation of a new government order market around systems for monitoring and limiting content, in the field of construction - through the formation of new lists megaprojects and so on. In order not to lose the approval of pressure groups, the authorities will be forced to support their actions, which will further slow down the economy. Therefore, in the coming years, we can expect a further reduction in investment, a gradual withdrawal of an increasing share of private business into the shadows, and a rapid reduction in budget revenues (from the moment when taxes collected from the production and export of hydrocarbons begin to decline along with the volumes of production and exports).

This downward spiral will most likely lead the country to eventual economic collapse. But this will not happen soon: the process of economic contraction is slow, and the reduction in oil production due to underinvestment will begin no earlier than in three to four years.

As for the budget, the following measures can be used in combination to cover its deficit in the coming years: increasing tax pressure on the hydrocarbon industry, using government reserves, increasing government internal debt in various forms, reducing budget expenditures in a wide range of areas (including including in the area of ​​currently untouchable defense and security expenditures).

Calculations show that the state will be able to maintain the primary budget deficit at about 3 trillion rubles ($50 billion, 4% of GDP per year) for three to four years. An increase in public internal debt by 1.5−2 trillion rubles per year (2−2.5% of GDP) over five to six years, at a minimum, will not threaten the budget with excessive growth in interest expenses, and the remainder of the deficit can be covered by using the Reserve Fund ( as of mid-2016, there was still $38 billion left) and the liquid part of the National Welfare Fund for about three more years. But from 2020, the use of funds will have to be replaced by budget cuts in proportion to the fall in fees, increased taxes, and unsecured emissions55.

It is difficult to say when major changes in budget design will occur. If oil prices rise, then every $10 increase in oil prices will bring the budget from $20 to $40 billion. Thus, oil at $65-70 per barrel practically solves the problem of the budget deficit for today. Likewise, if oil falls even to the level of 30-35 dollars per barrel, the shortage problems will become much more acute and the situation will change dramatically by 2019-2020.

In any case, sooner or later Russia will have to radically revise the level of budget expenditures. Most likely, we will see one of two options.

Or a moderate reduction in social spending, a sharp reduction in defense spending and an attempt to return to a client position in relation to the international community: opening markets, requesting loans, IMF assistance, etc.

Either a sharp reduction in social spending, maintaining defense and security spending and a course towards complete economic and political isolation.

The second option seems more likely.

THE ECONOMY IS SHRINKING - THE POPULATION IS NOT RESPONDING

There are several reasons for this phenomenon.

First, from the point of view of the vast majority of Russian citizens, the current crisis has come after a long period of economic growth. In the public mind, the fact that the situation today is still better than 15 years ago outweighs the perception that the situation has worsened. In order for mass discontent to arise, the level of income of the population, most likely, should drop by about 30-40%, to the level of 1999-2000.

Secondly, the growth of well-being in 2000-2012, as well as the subsequent stagnation and decline in 2014-2015, were extremely unevenly distributed in society. Only a small social group felt significant changes.

Indeed, in Russia in 2015, only 24% of non-Muscovites had foreign passports, while only 6% of Russians in recent years have traveled abroad once a year or more often. The median salary differs from the Russian average by almost 50% (that is, the income of half the population is shifted to the area of ​​very low salaries)58, less than 30% of the population has deposits in banks, and the number of owners of foreign currency deposits does not exceed 9% of the population. The Gini index, which at the end of the 20th century in Russia was about 8, today exceeds 18. The centers of concentration of wealth growth in Russia are Moscow and several other large cities. In Moscow, by 2014, per capita GDP was about 30 thousand dollars a year; by 2016 it fell to about 20 thousand dollars, and this level is still high enough to cause a social explosion. And over the past 15 years, the vast majority of the country’s population began to live only a little better, and in recent years - just a little worse. The changes are not so significant as to cause a sharp increase in protest sentiments.

Thirdly (and only thirdly), unlike Western democracies, in Russia there is no public competition between elites for power, accompanied by active criticism of the ruling group through independent media and other channels - competition that is financed and organized by opposition groups of the elite. The information space is ideologically monopolized. And if in developed democracies the media, as a rule, exaggerate economic problems for propaganda purposes, and opposition forces have the opportunity to coordinate social actions through information sources, in Russia today they downplay problems, relieve the authorities of responsibility, transferring it to external factors, and the opposition is deprived access to capital and the ability to coordinate protests.

HYDROCARBONS ARE ESSENTIAL FOR EXPORT

Russian GDP throughout the oil crisis of 2013–2016 shows a surprising stability of composition: most of the main areas of activity practically did not change their share.

Russian exports, in addition to hydrocarbons and their primary processing products, have three more significant items: export of metals, export of agricultural products and export of military products.

Exports of metals from Russia, as well as exports of hydrocarbons, are suffering from a general decline in commodity prices. In 2015, there was even a situation where domestic prices for a number of metals exceeded world exchange prices. Over the previous 15 years, exports of ferrous metals remained at about $20 billion per year, while exports of non-ferrous metals grew, reaching $40 billion per year by 2011–2012.

Today the situation has changed dramatically: over the six months of 2016, Russia exported metals worth less than $20 billion, of which non-ferrous metals amounted to less than $4.4 billion. Russia is one of the world leaders in sales of metals to the foreign market, and expect It is unlikely that its market share will increase significantly. The slow development of the market cycle suggests that metal prices are unlikely to rise significantly in the foreseeable future. But even if they grow, it is unlikely that Russia will be able to significantly increase export sales compared to the maximum levels of previous years. The market is very competitive, there are multiple trade barriers and restrictions around the world, and more than 20 countries have imposed restrictions on Russian products alone.

Agricultural exports have been growing recently, and their volumes can still grow significantly - of course, subject to significant investment and continued benefits to producers. However, such exports generate almost no tax revenue and do not form the basis for investment in other areas of production. The added value from agricultural production is very low, the total share of agriculture in Russia's GDP does not exceed 3%, in the world the share of agro-industry in GDP has been significantly declining for more than 30 years in a row. Rather, an increase in agricultural exports will lead to an additional burden on the budget in the form of the need to increase subsidies, sponsor preferential lending and build the necessary infrastructure at budget expense.

Russia's arms exports are carried out mainly on credit, and most of these loans are never returned. Moreover, Russian exports are poorly diversified: India, Vietnam, Venezuela and China buy more than 70% of all Russian exports.

Of course, in the future, the inability to use world achievements in the development of dual-use technologies will lead to the fact that Russian weapons will begin to lag behind its closest competitors - the USA, EU, Israel and, most likely, China. Already today, Russia’s position on the international arms market is weakening. It looks like it will lose the Indian market (primarily military aircraft). China, which is still buying Russian air defense systems, is already focusing on its own developments in the field of aviation. In 10-15 years, when the focus in this area shifts to sixth-generation systems in developed countries (and, accordingly, fifth in developing countries), Russia will have nothing to offer on the market.

The development of new export directions requires Russia to create conditions for simultaneously achieving financial efficiency of production on its territory and an acceptable level of quality and consumer properties of goods. Unfortunately, there are no prerequisites for the formation of these factors.

The average salary in Russia, although it has decreased quite significantly compared to 2008–2010, still remains significantly higher than in countries that are Russia’s main competitors in terms of location of labor-intensive production. Transport infrastructure is quite expensive, and export operations are practically monopolized, and the cost of entering the international market is much higher than that of competitors. The overall tax burden on business in Russia is approximately 10% higher than the average in European countries. An ineffective pension system that has no chance of surviving even one generation and a corrupt, ineffective healthcare system give rise to an actual doubling of pension and social savings. After paying high social and pension taxes to the budget, salaried workers are forced to allocate additional significant funds for medical care and “old age.”

From the point of view of product competitiveness, Russia obviously loses to most foreign manufacturers. There is no tradition of competition in Russia. The state's paternalistic attitude towards producers and the extremely irrational distribution of labor resources, coupled with low mobility of the population, lead to the fact that unviable, expensive and low-quality production continues for decades, receiving subsidies. Sanctions and protective duties do not contribute to the development of competition, allowing domestic producers not to care about quality. 70% of GDP is produced by state and quasi-state companies, which easily monopolize the market and thereby sharply reduce their costs on marketing and quality control. Many manufacturers lack the scale and ability to enter international markets. Foreign economic activity is heavily regulated (all exporters complain about this), and the cost of customs procedures is very high.

Repeatedly announced measures to simplify foreign trade activities, provide preferential loans for export supplies, and develop competition turn out to be just words, as are promises of reforms in other areas. The government continues to rely entirely on the extraction and export of natural resources - fortunately it still has some time and stability.

The government's plan is a slow movement to a dead end

The Russian government will be concerned about finding ways to improve the quality of administration in order to ensure the filling of the budget and satisfy the monetary appetites of pressure groups. At the same time, no measures, conventionally called reforms, can solve the problem of immediately balancing the budget. On the contrary, reforms are more likely to lead to the fact that in the next three to five years more funds will need to be spent, an imbalance in the economy will appear for a while - and the crisis will worsen.

Today's Russian government, which considers its mission to be self-preservation against the backdrop of a stable society, simply cannot afford such experiments. Real trust in the authorities in Russia is very low. Less than 29% of the population, according to the Levada Center, admit that they believe the statements of senior officials. This figure corresponds to the results of the last Duma elections, in which the turnout ranged from 30 to 40% and from 35-40 to 52% of participants voted for United Russia. More than 60% of the population did not find worthy candidates and boycotted the elections; the share of those who voted for power ranges from 10 to 20% of the population. Left-wing sentiments are gaining strength in the country: calls for restrictions on foreign trade and market mechanisms, large-scale emissions, nationalization, and public investment in infrastructure are increasingly finding support in society. Under these conditions, the government does not have a mandate for reform, and maintaining the status quo remains its only option.

The expected administrative measures from the point of view of economic theory will be aimed at increasing budget revenues without changing the economy itself or relationships in society and can be of six types:

Increase in the number of taxes and fees

Given the depression in the economy, the authorities cannot radically increase the tax burden, especially in the case of businesses that are sensitive to it. Therefore, the increase in the tax burden will occur in the area of ​​either the budgetary cycle; or an unavoidable base; or an extremely broad base, so that a very small increase will produce significant increases in revenue (property taxes, toll and parking fees, excise taxes on widely consumed imported and domestic goods, introduction/increase of fees for kindergarten, school, etc.).

Preference will be given to those methods that will allow private agents from among the “close” members of the elite who receive their commission to be placed between the budget and payers; sometimes it will reach 100% of fees.

Expanding the tax base

We can expect a reduction in the number of benefits, existing benefits will be given an indication of non-application, and the courts will provide support to the tax authorities.

Discrimination

For a minority of the population that does not directly affect the stability of the system, discriminatory laws may be adopted that will ensure budget replenishment.

For example, exponential tax rates on real estate, cars, and art may be introduced; significant fees have been announced for holding a foreign passport; foreign spending is limited and taxed; a very high income tax rate was introduced for the high earnings of the “top” 3-5% of the population.

Living in the city center, living in a separate house, and having autonomous utility systems may be subject to permanent taxes; purchase of high-quality equipment, jewelry, expensive items of clothing - one-time purchases.

Reducing the base of budget recipients

We will inevitably come to raising the retirement age.

Spending on education and health care will be underfunded and often diverted in non-transparent directions.

All manufacturers of goods and services purchased by the budget will be given strict instructions to reduce the cost of supplied goods, including at the expense of quality. Quality checks will be finally formalized.

In areas that are not obvious to the general public, the list of funded positions and volumes will be reduced. First of all, quotas for medical procedures, volumes and quality of drugs supplied to hospitals will be affected; funding for “side” social institutions that are not related to the interests of influence groups, such as music schools or out-of-school educational institutions, will be reduced (almost to zero). Such institutions will be partially transferred to a paid basis, and partially transferred to organizations that want to spread their influence and are loyal to the authorities, in particular the Russian Orthodox Church. The elites of the regions (and there are several of them), whose trust is now bought by generous funding from the center, will be asked to significantly reduce their appetites. In case of disagreement, there is always the possibility of using harsh force. And if they turn out to be unsuccessful, costly or lead to great casualties, there will be something to blame for economic problems and use the situation to distract society from problems with the economy.

Requisitions

Requisition actions in relation to bank deposits are quite possible:

— mass bankruptcy of banks with the transfer of assets to the state;
— forced exchange of foreign currency deposits into rubles at a low rate;
— forced exchange of ruble deposits for long-term obligations of the state and shares of the banks themselves, especially state-owned ones.

Requisition of capital abroad is possible - for example, a complete ban on property abroad for Russian residents with the requirement to bring money into Russia and subsequent currency exchange.

Requisition of businesses is also possible: partly to increase budget revenues, partly in favor of large and small local agents of influence groups (to satisfy their appetites as a replacement for direct budget revenues).

At some point, judicial confiscation of property may begin: the state will “by law” take the property of those who have become unwanted or simply weaker asset owners and sell it for very little money to strong and loyal agents of influence. The budget will make a profit, and the cost of maintaining loyalty can be reduced.

Economic conditioning

Many public services that the state provides today free of charge or for a nominal fee can be used to reduce its costs, in particular on wages.

Compulsory work in the public sector for students - for several years after graduation at a reduced salary - can become a condition for free education.

Compulsory service in the army or in alternative economic service, regardless of admission to a university, can become a condition for free education at school.

The announced privatization can hardly be included in the list of measures that the government is taking to improve the situation and replenish the budget.

The value of assets in Russia today is very low, and there are few people willing to buy them. And in the best case, privatization will result in the requisition of capital from unwanted oligarchs (but it will not be enough to solve problems), the redistribution of cash, for example from Surgutneftegaz to Rosneft, or the sterilization of deposits in banks and funds in non-state pension funds.

The recent widely publicized deal to privatize the oil company Bashneft - a deal that was supposed to take place in parallel with the sale of the state stake in Russia's largest vertically integrated oil company Rosneft - clearly showed that privatization in Russia cannot be expected to reduce the state's share in the economy, nor receiving additional funds. In the end, the buyer of Bashneft was Rosneft, which was already heavily indebted to the state. The state's share in Rosneft, due to the complete absence of third-party buyers, will be turned into treasury shares - most likely through lending to Rosneft by Vnesheconombank.

All these measures, half-measures and imitations of measures, due to the obviously negative reaction of the economy, will lead to a further reduction in the possibilities for generating budget revenues and (or) be of an irreproducible, one-time nature. Within five to six years, their potential will also be exhausted, and the pressure from the “left” will only intensify. This means that Russian society, accustomed to paternalism and expecting the state not to create conditions for prosperity, but to increasingly subsidize the standard of living, will demand indexation of wages in the public sector, benefits and pensions, increased spending on ineffective social infrastructure and support for imports.

The elites, and above all the so-called “systemic opposition parties”, accustomed to exchanging loyalty to power for stable flows of funds from the budget into personal pockets, will also be dissatisfied with the reduction in official allocations and informal opportunities. It can be expected that the “left” parties, which in total received more than 40% of the mandates in the new Duma, will, as they begin to understand that the government is losing support, and they are the only ones who can get it, will increase their independence from the authorities and put pressure on her. In particular, to demand more and more populist steps, to blackmail the authorities with a refusal of support and the start of an independent game. The authorities will be forced to make ever greater compromises: increase the scope of price and business regulation, increase unsecured emissions, close the domestic market, de facto nationalize entire industries and confiscate savings and property, and introduce further restrictions on cross-border transactions.

The decline in the ability to import consumer goods and industrial products (due to a reduction in the volume and value of exports) will lead to the development, mainly under state ownership or with large-scale state support, of replacement industries. However, their effectiveness - in the absence of access to modern technologies, an international R&D school, full-fledged industrial cooperation and cheap financing - will be low, and the cost in a small market will be high. And Russians will have to remember the consumption standards of the late USSR, when even low-quality domestic goods were in short supply, and entire groups of them (cars, electronics, real estate, high-quality clothing) were unavailable due to high prices.

Russia will be drawn into a long-term period of so-called Peronist economic policy. According to the experience of other countries, such periods can last more than ten years, and their consequences, including social ones, can be traced much longer.

Even if the authorities manage to maintain the stability of the economy and prevent the catastrophe that happened at the turn of the 1990s of the last century, Russia may face an even less optimistic scenario. There is a high probability that the current moderate-conservative authoritarian regime, as it exhausts its economic opportunities to maintain the loyalty of the population, will be replaced by a tougher, left-conservative paramilitary or military regime, the support of which by the population will be based on a mixture of dissatisfaction with the current state of affairs and fear of outside world.

Such a regime will delay the development of the country even more.

BLACK SWANS OF THE RUSSIAN ECONOMY

The probability of the next development of events is small, but you should not discount it.

In our baseline scenario, the Russian economy shrinks proportionally for at least three to four years, after which socialization processes begin to prevail. Gradually, price and currency regulations arise, foreign trade is monopolized, large-scale nationalization is accelerated, regulated wage levels and guaranteed consumption are introduced, etc. As a result, the economy is able to contract further, but does not collapse for several more years, perhaps more than ten.

However, this process may be interrupted by serious events, as a result of which the situation will begin to rapidly develop uncontrollably towards the severance of internal economic ties, naturalization of the economy, rapid dollarization of the economy and loss of foreign exchange control levers, a landslide reduction in budget revenues, the emergence of total deficits and the formation of large groups of the population who are unable to provide for themselves.

In turn, these phenomena will be followed by a sharp increase in crime; autonomization of almost all regions (and donors who will no longer want to share, and dependents who will look for options for survival in the face of the cessation of subsidies) up to active and, possibly, successful attempts at secession; the emergence of local armed conflicts, primarily the return of tension in the North Caucasus - and, most likely, a series of attempts to change power like a palace coup. Then, probably, there will be a long period of political instability and, perhaps, even the collapse of the country - according to the model of the USSR or as a result of much bloodier processes.

It is unlikely that any isolated event could lead to the described scenario in the coming years. However, a combination of two or three factors discussed below may well serve as a sufficient condition for the onset of a disaster.

Banking crisis, not compensated by government injections and additional capitalization due to the slowness of the authorities or inability to make decisions

If a large-scale banking crisis or the catastrophe of one or two large banks, as mentioned above, is not extinguished by the provision of liquidity before payers begin to experience difficulties with making payments, and panic begins among depositors, a sudden dehydration of the banking system is possible, an attempt mass withdrawal of savings into cash (even with a direct ban) and into tangible assets, an instant jump in inflation and the exchange rate and the loss of the ruble’s function as a measure of value.

A similar situation occurred in Germany in the mid-1920s, when inflation and prohibitive calculated risks quickly deprived businesses of incentives for development - and the economy responded with a sharp decline.

Failure or significant reduction in the performance of a significant number of infrastructure facilities

This may occur as a result of natural depreciation, a decrease in the quality of service, interruptions in the supply of spare parts and electricity that occurred due to general budget cuts and lack of investment in equipment modernization. Under certain conditions, accidents at key infrastructure facilities, even if they do not cause casualties or damage to other facilities, can significantly affect the country’s economy. Particularly dangerous in this sense are utility systems (water supply, gas supply, household electricity supply), problems with which may arise due to underfunding and local collapse of housing and communal services systems.

Sharp drop in hydrocarbon production

Let us consider this possibility in the context of continued low prices for oil and gas on the foreign market.

The oil extraction methods used in Russia are ineffective in terms of the recovery rate, which is currently lower than in the United States, on average by 30% and is slowly declining, while in the United States it is slowly growing. The maximum possible production in Russia will fall and, according to some estimates, by 2035 it will be reduced by at least half. We do not fully know the level of long-term negative effect from the current practice of accelerated oil production in Russia, but it is scientifically confirmed: this practice leads to a decrease in the recovery rate. It is quite possible that production will begin to decline significantly in just three to four years, and Russia’s lack of modern exploration and economical production technologies, partly due to sanctions, will not allow it to increase. We can see how this happens in the example of Venezuela, which has lost almost two-thirds of its possible production in ten years and is already purchasing oil abroad.

The introduction of an embargo against Russia on the purchase of oil and gas by European Union countries could have a similar effect. Theoretically, the EU will be ready to abandon Russian oil within three to four years, but so far the EU has not publicly announced any reasons for this or such intentions.

Collapse of large industries

Due to the decline in purchasing power in Russia in the coming years, the demand for various services and goods, primarily durable goods, will change significantly. A whole range of industries are under threat - from mass ones, such as small individual service enterprises, to large ones, such as the construction industry.

The cost of construction per square meter in Russia has decreased in recent years by 20%, to the 2002 level, but prices on the market have also fallen to the 2001 level (all in real rubles). In such price parameters of supply and demand in 2002, the volume of construction was 49 million square meters. m per year, and not 138, as in 2014, no more than 5 million people were involved in the industry, and not 5.7 million, as today.

It can be assumed that the volume of construction in the absence of global subsidies will tend to 50 million square meters. m per year or even be lower, and 1 million people will become unemployed in this industry alone.

You can add to the list the banking industry, transportation business, tourism, hotel and restaurant businesses, import trade, etc. There is a possibility that there will be a one-time and mutually inducing collapse of several industries with an increase in unemployment by 5-10 million people (8-12%) - up to 13-18% of the labor force.

Neither the state nor business has anything to offer these workers. Investment activity in the country is practically zero; the industries that 12-15 years ago (when construction was on a much smaller scale, like individual services) provided jobs for these people have greatly declined or died out.

Internal conflict among pressure groups

The situation is unlikely, but possible.

It is unlikely because the interests of pressure groups are quite well divided, arbitration between them is established, and it seems that all groups strive to preserve peace.

On the other hand, the experience of many countries shows that conflict, despite the high level of organization of checks and balances, often arises if the share of rent in GDP falls below 10-12% and distributed flows begin to be insufficient, and per capita GDP is low - below 6 thousand .dollars. In Russia, the share of rent in GDP is only slightly higher (about 16-17%) and is slowly decreasing; per capita GDP, according to the forecast for 2017, is about 8 thousand dollars.

Again, from the experience of other countries, we know: a conflict between influence groups, even if it does not directly develop into a clan war, still entails significant destabilization of the economy. This is due to significant personnel changes, including the resignation of top officials, the adoption of opportunistic but extremely harmful decisions for the economy, a sharp increase in risks due to the transfer of the clan struggle to the legal plane (the use of large-scale criminal cases), etc.

The same situation often develops even in stable and well-organized elites, if the key person(s) responsible for the balance of interests falls out of action. In Russia today there is only one such person, and although the likelihood that this person will suddenly cease to effectively perform the functions of an arbiter and controller of interests is low, it is still not zero.

High risk of a very expensive, irreparable and irrational decision

In modern Russia, where power is non-institutionalized, there is no competition and systems for critical evaluation of decisions and actions, and public opinion is significantly distorted by propaganda and distracted by false agendas, such a risk exists.

We are talking about a decision that will cause a sharp change in the situation and lead to extremely negative economic consequences.

It is difficult to predict what kind of decision this will be: perhaps an increase in the tax burden, which will cause a collapse in business activity; perhaps escalation or the initiation of new military or hybrid actions, the cost of which will ultimately undermine the economy or lead to sanctions of a completely different level; or a decision to impose strict regulation of prices, capital transactions or exchange rates.

INVESTMENTS IN INFRASTRUCTURE WILL NOT BE EFFECTIVE

There is evidence of a direct link between the level of public investment in infrastructure and economic growth. However, it is necessary to understand that this connection does not always work and not everywhere.

Any investment actions - that is, in fact, offering the market new opportunities - must correspond to demand, which either already exists or can only be formed. Otherwise, they are economically meaningless.

We know of cases of boosting the economy through investment in infrastructure in situations where business demand for infrastructure significantly exceeded supply.

This phenomenon is observed in African countries where there was insufficient infrastructure for even basic development of trade and industrial relations. At the same time, foreign companies were ready to invest in the economy, and the local population was ready to join modern-type economic relations. We remember examples of new territories in the USA, Canada, Mexico, and other countries where it was the expanding business that pushed the state to invest (by the way, not all investments in infrastructure were state-owned).

That is, this model works most effectively where the level of infrastructure is extremely low and the demand for development is high. In countries with an average level of infrastructure, like Russia, the effect is usually much smaller. So much so that the question arises: in cases that can be considered “successful”, was the onset of public investment in infrastructure a reaction to increased economic activity?

In today's Russia, the depression of economic development is not associated with the infrastructure ceiling, and the high cost of transportation, communications and logistics does not affect the increase in the cost of the product as much as risk factors. In addition, Russia lacks the capital and labor resources to support rapid growth.

Under these conditions, large-scale infrastructure investment by the government is likely to face the following series of problems:

Planning

Not the necessary areas of investment will be chosen, but areas that are beneficial to the most powerful lobbyists.

Financing

Projects will have large initial re-estimations; up to 50% or more will be spent in excess of the actual cost; most of it will go offshore, reducing the ruble exchange rate.

Performance

Work will proceed slowly, without meeting quality standards; Some objects will ultimately be of little use or unsuitable for effective use.

Usage

The facilities will be underequipped, understaffed, and the demand for their use is in question. The lack of additional investment in maintenance and adaptation will doom many facilities to idle time.

Impact on overall demand

Funds for infrastructure investments will be received by emission, their proliferation into the economy will lead to increased inflation, the total volume of effective demand will only decrease, and the demand for these objects will decrease even more.

Impact on the business climate

Shifting resources to public investment will reduce business activity and increase costs for independent businesses. In conditions of low production volumes and a shortage of labor resources, government investments will draw on both raw materials and workers, raising both prices and wages. Using cash flows for direct imports (raw materials, materials, equipment) and indirect imports (goods for sale to those working on projects) will temporarily increase imports and create additional pressure on the ruble exchange rate and the social sphere.

Influence on domestic policy

The emission nature of spending will provide temporary income to the elite associated with power, which will weaken their need for real reforms to maintain their income. Thus, reforms will once again be delayed, and the country will roll back even further down the level of development. The gap from competitors will become even greater.

Influence on foreign policy

The combination of domestic sources and worsening economic problems will require a shift in the population's attention and will make foreign policy even more aggressive to maintain the rating. This will reduce the likelihood of both attracting foreign investment and integration into global technological processes.

But even if we assume that there is a demand for infrastructure in the country and all the above-mentioned problems can be avoided, the volume of public investment to boost the economy, which is already at the Russian level of per capita GDP and infrastructural development, should be colossal.

Statistically, if a middle-income country with a stable level of public investment in GDP of 3-4% increases investment in infrastructure by 1%, this gives a one-time increase in GDP of 0.08% with a 75% attenuation over the year. In order to achieve GDP growth of 3% per year, Russia needs to start by increasing public investment by 36%, next year increase it by another 18%, then by 9%, then by 4.5%, and so on. In total, state investments should increase by 3.7 times (and if we take into account that 50% of our investment will be spent on corruption schemes and inefficiency, then by 7 times). According to the most conservative estimates, Russia will have to invest 15% of GDP in infrastructure for many years. For comparison: Mexico spends 5% of GDP on infrastructure, India - 10%, Indonesia - less than 7%, China - from 6 to 11%.

EFFECTIVE REFORM

The Russian economy has two basic problems: risks that are disproportionate to income-generating opportunities, and over-regulation.

The most primitive (but very correct) economic model says: growth occurs where entrepreneurs and investors see a positive difference between the level of expected income and the level of expected risks from investments or starting projects.

Thus, for economic growth it is necessary that either potential income is sufficiently high or the risks of doing business are significantly reduced. Under these conditions, capital itself begins to flow into the country - and entrepreneurs master new investments. At the same time, the market, with minimal government assistance in the form of reasonable regulation, is able to identify growth points.

In Russia today there are no areas in which one can expect super-profits. Russia is a country that has quite strictly isolated itself from international cooperation and with a relatively small population for an isolated market (only 2% of the entire Earth) - this is not enough for business to reach the level of competitive prices and quality on a global scale.

Russia is a middle-income country; there are virtually no niches left for high-margin businesses, especially today, when residents’ incomes are falling.

Russia is a country of quasi-monopoly conglomerates that provide services vital to business (energy supply, transportation, etc.) at inflated prices.

Russia is highly dependent on imports, meaning Russian companies purchase raw materials at high prices - and they are subject to increased taxes.

In this situation, the only way to increase the country’s economic potential is to reduce risks. In developed countries, such as the Nordic countries, the USA, Canada and others, the space for generating windfall income is also limited, if it exists at all, primarily due to high competition, high taxes and slow consumption growth. Nevertheless, the average growth rate of per capita GDP in these countries exceeds 1 thousand dollars per year (which for Russia would be 13% per annum!) - this result was achieved due to the extremely low risks of doing business.

The basic risks with which to start are the risks associated with ownership of property and law enforcement - both in disputes with the state represented by regulatory, law enforcement and fiscal authorities, and between business entities.

Unfortunately, it is impossible to briefly outline coherent and detailed proposals for fundamental restructuring of the system in order to minimize enforcement risks. However, it is worth indicating the directions of movement.

Required:

1. large-scale legislative changes aimed at protecting entrepreneurs and investors;

2. guarantees of the primacy of international courts and law;

3. presumption of innocence in cases against the state;

4. prohibition on initiating criminal cases in the absence of a supporting decision and even direct transfer of the case in civil proceedings;

5. widespread introduction of jury trials;

6. business protection program when owners or top managers are accused;

7. independent universal election of judges starting from the lowest level;

8. a system for protecting the bona fide purchaser and removing all liability from the holder of the rights, if the rights were actually issued by the state, regardless of the violations committed by the state;

9. 100% property amnesty, etc.

All this should lead to entrepreneurs and investors reconsidering risk assessments and a transition from today’s feudal-corruption model of law enforcement to a model based on competition between the parties and compliance with the law.

Finally, a very important part of the risk reduction system is a set of legislative measures to protect investors and entrepreneurs from changes in legislation, decisions and actions (not only illegal) of government bodies and other actions or inaction on the part of the state or any officials in any forms that entail represent losses or lost profits.

In particular, such legislative acts should protect investors and entrepreneurs from those changes in legislation and government decisions that significantly worsen the conditions for doing business - if the business was created or developed in reasonable anticipation of previous conditions and (or) if the state in one or another gave guarantees or assurances in any other form, including verbal ones, that the conditions would remain the same.

And of course, mass lawsuits and defense in international courts should be allowed without any reservations.

Economics is a fairly broad concept that includes the study of social work and economic activity, analysis of the external and internal movement of products of social activity. Money is taken as the basis of economic models, and a person is considered as an economic unit.

Economics is a dynamic science, as it is constantly changing, developing, and being supplemented. This science is closely related to politics: governments of different countries develop various economic plans, adhere to them and ensure that society is provided with necessary goods and services in sufficient quantities.

How the economy works

The economy is a complex system that exists according to its own laws. We are talking about laws:

• increased demand, supply, needs;
• increasing time costs;
• diminishing returns;
• diminishing marginal utility;
• limited resources.

The modern economy is striving for globalization, which ideally should lead not only to the creation of a common economic policy, but to the emergence of a common money and a common government.

Money is the basis of the economy today: the first money appeared in China, and already in 1971 an economic reform was carried out in the world, the consequences of which still affect the economy today - we are talking about tying the dollar to gold.

What awaits the Russian economy

Russia is a country with a raw materials economy, that is, a country whose economy is built on the sale of raw materials. As for domestic production, today it is developed at an insufficient level.

We can talk for a very long time about what awaits the Russian economy in the near future. Most experts are inclined to believe that we have a difficult and long road ahead of us out of stagnation. But opinions differ on how long it will take to bring the economy to a decent level, and on which scenario is best to do this. You can find up-to-date information on this topic on the Sravni.ru website.

Economic development

Economic development is a stable quantitative and qualitative change in economic indicators:

• level of education;
• production forces;
• standard of living of the population, including cultural;
• level of medicine;
• public relations.

One of the indicators of the competitiveness of an individual country’s economy and economic freedom is GDP per capita. The main engines of economic development and growth also include human resources and human-created innovations.

Modern economics

The Russian economy is going through hard times today (as is the global economy). Unsurprisingly, the unstable political situation could not but have an impact on economic development, making relations between some countries very strained. This, in turn, provoked many restrictions in the field of foreign trade.

However, many experts are inclined to believe that after the political situation stabilizes, the economy will also begin to actively develop and strengthen.

You can find out what factors influence the modern economy, what ways you can overcome the crisis, and get acquainted with the opinions of users and experts on the Sravni.ru website.