the russian economy sucks, too (article)

[heavenlyboy34]

http://www.rbcnews.com/komment/komment.shtml?2008/08/25/32083179

Audit Chamber experts blame uncontrollable inflation in Russia largely on a sharp increase in budget spending last year. They believe this was the reason why 12-month inflation approached 15 percent in May-June of this year. Meanwhile, auditors note that the problem with price rises could last a long time. Analysts agree with this point of view and warn that the tensions could persist not only until the end of 2008, but also next year.

Analysts agree that inflation surged on the back of a sharp increase in budget spending last year. Moreover, they say they warned this could happen at the end of last year. Meanwhile, the situation with price increases will only intensify not just this year, but also the next. Experts foresee that electricity, gas, and railway tariffs will increase in 2009, driving inflation higher.

Furthermore, it is not clear how rapidly food and fuel prices will increase on the world market. On the positive side, the Central Bank will take measures to stiffen monetary policy, as they help weaken the contribution of monetary factors to speeding up inflation. Experts also blame the current price increases on the Russian economy’s structural imbalance, and say fighting against a high level of market monopolization, decreasing the energy intensity and the cost of sales going into production could help resolve the matter. And these are not things that can be solved in 3-5 years.

Commenting on future developments, analysts believe that it would be reasonable to create a separate government body that would oversee inflation and have the corresponding competencies and instruments. Despite statements from seemingly all the notable statesmen regarding the “unacceptable” level of inflation, prices continue to rise, pointing to the fact that the economy has some problems, and there is no other way but to face them.

Pessimists turn their finger on the global economy, as during the recent financial crisis many countries found themselves under a threat of recession or stagflation. As an economic slowdown is out of the question for Russia in the foreseeable future, inflation is not about to fall sharply either. Although the rate of economic growth will decelerate, it will stay above 5-6 percent.

In such a situation, hope remains that these years will be spent on creating a powerful and competitive economy. Slowing economic growth amid higher inflationary risks is a global trend that experts do not think will affect Russia. According to their estimates, the situation could improve if the population increased their share of bank savings, since high inflation expectations also aid inflation. However, terrified by price rises, people currently prefer to spend their money as they shop, rather than take it to the bank.

As for hopes that inflation will be lower than last year, expert opinions do not align with those of ministries and government agencies. Analysts suggest that the authorities may be reluctant to upgrade their year-end inflation projections in order to restrain the population’s inflation expectations. However, there is virtually no chance of seeing inflation drop lower than last year’s 11.9 percent by the end of the year, especially now that year-to-date inflation has already reached 9.5 percent. Nevertheless, there will be another chance again next year, as optimistic forecasts put inflation at 10.5 percent for 2009. Consolidated analyst forecasts for this year’s annual inflation range between 12.5 and 13 percent.

 

[LiveFree79]

http://www.rbcnews.com/komment/komment.shtml?2008/08/25/32083179

Audit Chamber experts blame uncontrollable inflation in Russia largely on a sharp increase in budget spending last year. They believe this was the reason why 12-month inflation approached 15 percent in May-June of this year. Meanwhile, auditors note that the problem with price rises could last a long time. Analysts agree with this point of view and warn that the tensions could persist not only until the end of 2008, but also next year.

Analysts agree that inflation surged on the back of a sharp increase in budget spending last year. Moreover, they say they warned this could happen at the end of last year. Meanwhile, the situation with price increases will only intensify not just this year, but also the next. Experts foresee that electricity, gas, and railway tariffs will increase in 2009, driving inflation higher.

Furthermore, it is not clear how rapidly food and fuel prices will increase on the world market. On the positive side, the Central Bank will take measures to stiffen monetary policy, as they help weaken the contribution of monetary factors to speeding up inflation. Experts also blame the current price increases on the Russian economy’s structural imbalance, and say fighting against a high level of market monopolization, decreasing the energy intensity and the cost of sales going into production could help resolve the matter. And these are not things that can be solved in 3-5 years.

Commenting on future developments, analysts believe that it would be reasonable to create a separate government body that would oversee inflation and have the corresponding competencies and instruments. Despite statements from seemingly all the notable statesmen regarding the “unacceptable” level of inflation, prices continue to rise, pointing to the fact that the economy has some problems, and there is no other way but to face them.

Pessimists turn their finger on the global economy, as during the recent financial crisis many countries found themselves under a threat of recession or stagflation. As an economic slowdown is out of the question for Russia in the foreseeable future, inflation is not about to fall sharply either. Although the rate of economic growth will decelerate, it will stay above 5-6 percent.

In such a situation, hope remains that these years will be spent on creating a powerful and competitive economy. Slowing economic growth amid higher inflationary risks is a global trend that experts do not think will affect Russia. According to their estimates, the situation could improve if the population increased their share of bank savings, since high inflation expectations also aid inflation. However, terrified by price rises, people currently prefer to spend their money as they shop, rather than take it to the bank.

As for hopes that inflation will be lower than last year, expert opinions do not align with those of ministries and government agencies. Analysts suggest that the authorities may be reluctant to upgrade their year-end inflation projections in order to restrain the population’s inflation expectations. However, there is virtually no chance of seeing inflation drop lower than last year’s 11.9 percent by the end of the year, especially now that year-to-date inflation has already reached 9.5 percent. Nevertheless, there will be another chance again next year, as optimistic forecasts put inflation at 10.5 percent for 2009. Consolidated analyst forecasts for this year’s annual inflation range between 12.5 and 13 percent.

This is bullshit. Russian's economy is doing great. If you look at GDP it's up significantly for the last 10 or so years. Wages are up etc. Russia's economy is doing better than America's and at this point is much more robust and resilient. Plus they have huge reserves of oil and natural gas.

 

[torchbearer]

Russia's economy has always sucked, and still does because of the lack of middle class and small businesses.
All the state ran oil industries and such just went into the hands of the elites who are making a killing off of their comrades blood and sweat.

I admit I haven't followed the russian financials for a few months now... but unless there was a huge turn around. Russia is not booming. Its just the rich getting richer, like it is in america.

You would have thought that the french revolution would have been a warning sign, i guess they feel they are above getting touched by filthy peasants.