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Business / Finance

The Horsemen Of The Apocalypse. 9 alarms for the Russian economy

Banki.ru: themes of the day 04.12.2018 at 21:06

Banking and financial news on the website Banki.ru

Small GDP growth should not mislead us. The protracted stagnation in the Russian economy does not mean that tomorrow will not be worse. Banks.ru found nine threats to the future of our economy.

the Latest news increasingly raise the question whether Russia is on the threshold of a new economic crisis. However, it is often possible to hear the answer: "And we have the previous has ended?"

the Signal 1. Incomes: money is not and never will be

the Russians are all large pessimists, shows a fresh poll. The index of assessments of the economic situation fell from 59 points in 2017 to 43 points in 2018. Diminished by his fellow citizens and social optimism (40 points compared to 63 points last year): only 25% expect an improvement of their situations, the same — on the contrary, deterioration, and another 40% believe that next year will live about the same as now. But this is unlikely.

Real disposable incomes are falling four years in a row. Their growth in October (1.4% over the past 12 months, according to Rosstat, after four years of continuous fall) does not change anything in essence: if the company will be able to finish in positive territory, it will be purely symbolic. But in the first half of the year real income growth was quite rapid, but the decline resumed in the summer, leveled his.

the Amount of money available to the Russians declined in October compared to September for 500 rubles, or 2.2%, according to research holding "ROMIR". And the savings fell to the lowest level in the last 15 years. "The share of income used for savings in January — September 2018 was 4.2% and was the lowest in the period since 2004," reads the "Monitoring of socio-economic status and well-being of the population", Institute for social analysis and forecasting Ranhigs.

"From the point of view of stability of Finance macroeconomic indicators feel good: positive trade balance, a large budget surplus, increasing foreign exchange reserves. But people it for yourself does not feel, says, partner, Director of product development Zichain Taras Chumachenko. — Strong growth of over-indebtedness of natural persons, a record decline in the saving rate, the reduction in real disposable income over the past four years have caused the greatest alarm."

as one of the symptoms of poverty can result in growth of teenage crime, says the General Director of GPC by Alexei Filippov. "In the Moscow suburb of Serpukhov and the Crimean Sevastopol the number of juvenile offences has increased from the beginning of the year about 30%, Penza and Kurgan — 10% — gives it the data of the interior Ministry and Prosecutor General's office. Similar statistics have been reported in other large Russian cities. Officials do not hide that this is a disaster, and it is related to poverty, with the financial welfare of the family children rarely get into the world of crime."

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do Not expect revenue growth in the next year: this will prevent the increase of VAT from 18% to 20% from January 2019, which will cause rising prices.

Vague and more distant prospects. "On 22 November the state Duma in the third final reading adopted the law on freezing the funded part of pensions Russians until 2021, inclusive, reminds Filippov. — Working Russians will continue to feed pensioners, do not delay to their pensions."

the Combination of these factors has led to the fact that the refrigerator has started to win the TV. Russians increasingly see the situation in Russia on the basis of the reality that surrounds them, not the one that shows the official propaganda. The consequences of this shift in consciousness captures another poll Fund "Public opinion" (FOM).

the Electoral rating of President Vladimir Putin over the past six months has fallen to level of February 2014, before the annexation of Crimea, the survey captures Thomas. If in may 2018 for the current President were willing to vote 64% of Russians, in June this figure was already 56% in September to 46% in November to 45%. The last time such a low figure was almost five years ago.

the Decline of Putin's rating records and poll. It continues with a giant ahead in the list of politicians that cause the Russians the greatest confidence. However, according to the most recent data, the figure is the lowest in the last 12 years is 35.6%.

the Signal 2. Company: disappears more than it appears

is Bad not only people, but businesses. According to the Federal tax service by September 2018 compared to 2017, the number of microenterprises decreased by 152 thousand, of small businesses was less than 12 thousand, and medium-sized enterprises — on 1 thousand ", on cleans the registry, getting rid of fictitious companies, but I am sure that the list eliminated a large part belonged to the decent honest businesses," says Alexei Filippov.

"as for the "demographics" of organizations, it is very indicative of the latest data of Rosstat in August, 2018 in Russia, there were 26 402 organizations, while the number of officially liquidated during the same period amounted to 48 789, — quotes the same statistics, the Director of the Institute of strategic analysis of company FBK Igor Nikolaev. Thus, the number of liquidated organizations in August 2018 was 84,8% more number of created entities".

why would companies feel good if Russia is among the worst countries in the cost of doing business. Experts of the Moscow school of management SKOLKOVO and investment group UCP estimated the value of the business in the 30 largest economies in the world. Russia was on the 27th place, ahead of only Nigeria, Egypt and Argentina.

"a Russian businessman, intending to sell his company, can count on the sum several times smaller than its counterpart not only of the largest countries in Western Europe or the United States, but most developing countries, including China and Brazil, write the authors of a study published in November. — Moreover, this "Russian discount" is only partly associated with unfavorable foreign conditions and penalties: cost of sale of Russian companies was much lower than the average levels five years ago."

Experts compared the country for 19 indicators in five categories: macroeconomic, security, investment, interest rates, availability of capital and tax policy. For example, the Russian public company directed on dividends averaged 31.7% of its profits, while the BRICS countries and 50.7 per cent, while the average level for the 30 largest economies — 64,6%. Stock market capitalization in Russia was only 50% of the national GDP, while the average is 75%.

the Signal 3. Debts: too many "bad" debts

One of the symptoms of poor health in both population and business growth in the credit load. "In Russia, the years there was a steady growth of overdue debts and now the debt bubble threatens to burst, provoking a new economic crisis, says the Chairman of the Subcommittee on financial literacy and financial improvement Committee of the chamber of Commerce of the Russian Federation on financial markets and credit institutions, General Director GK "Rykov group" Ivan Rykov. — The amount of debt of the corporate sector comes to around 3 trillion rubles."

the Amount of problem receivables in holdings reaches 80%, power rating Rykov. "All these beautiful balance sheets, which contain hundreds of millions of receivables, in fact are nothing, he continues. — They even assets full can not be considered, only a small fraction of these debts really liquid. All this can lead to a chain reaction of defaults. And then what? The company will barter go, we are in the economy back to the situation of the ' 90s?"

Growing the debt load of the population. In August 2018 total debt of the population to banks amounted to 13.5 trillion rubles, having increased since the beginning of the year by 10.7%. And it against almost stopped growth in real incomes. The problem "bad" debts already becomes relevant for banks. According to the Federal bailiff service, not more than 25% transferred to the bailiffs of debts before banks actually secured by the property.

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moreover, the growing debt is not just consumer loans. National Bureau of credit histories (nbki) collects data about malicious defaulters of utilities. At the beginning of November, the number has reached 29,2 thousand people, having increased from the beginning of 2018 20.7%. The duty of these people for utility services have reached by November of 1.63 billion rubles, having increased since January by 27.3%.

"Is the main problematic point of the economy.

The most alarming data is the high level of bad loans that is close to the maximum in 2011 — draws the attention of the head of the Department for macroeconomic analysis Saxo Bank Christopher Dembek, evaluating, however, first of all debts of Russians to banks. In the long term the Russian economy will have a strong slowdown".

the Signal 4. Tax pressure

hope to improve the current situation is difficult in the ever-rising taxes. Over the last three years taxes grew at a rate twice as fast as wage growth. The company "FinExpertiza" by analyzing the data of Rosstat and the Federal Treasury, estimated that the greatest burden on the Russians have three kinds of taxes: transportation, property and land. From 2015 to 2017 the collection of these fees increased by 28%, and salaries — only 15%.

And the new year does not promise anything in this regard is good. "The VAT increase from January 2019, is likely to exacerbate negative processes in the economy: inflation will rise, consequently, real incomes fall, consumer sector of the economy will face a decline in profits, which will serve as the driver of growth unemployment, says CEO of online service loans "Robot Timer" Roman Makarov. — If you do not succeed in stopping the decline in real income of the population, Russia's economy next year may face a recession and near-zero growth".

the Signal 5. The abundance of bad ideas

to Worsen the situation not only can the actual event (same as the VAT increase, for example), but only intention. Or even just an idea. Unfortunately, the minds of our rulers are too rich in ideas which sometimes do more harm than good. "A lot thrown in the information field are not too important but destabilizing ideas. For example, to take to the state unclaimed deposits", — says the managing Director of macroeconomic analysis and forecasting "Expert RA" Anton tabah. The initiative, which in the case of its realization in the future will affect units now causes much more harm: for investors in the current situation, it is sufficient to hear that the government wants to expropriate the deposits, and so the details they do not need.

However, there are far more serious initiatives. The last vivid example — the de-dollarization of the Russian economy. It has triggered the outflow of funds from banks. In August the volume of deposits in Russian banks decreased by 0.6% and in September by 0.8%. In real terms, the outflow of deposits in the third quarter of 2018 was 1.1%, which was the worst quarterly figure in 2014. But that's not all.

"to Persuade foreign partners to use in contracts Russian ruble, in principle, easy. However, we must understand that the partner wishing to insure themselves against fluctuations in the currency markets, agree on the price of the contract with a large, up to one third discount, warns associate Professor of economic faculty of Moscow state University Magomet Yandiev. In other words, Russian oil will cost 3,600 rubles per barrel, at a price of 60 dollars per barrel and an exchange rate of 60 rubles per dollar, and less, only 2 500-3 000 per barrel. On the other hand, supplied to Russia, for example, a tractor will cost 1.2 million rubles at its original cost in 20 thousand dollars, and expensive — 1.7—2 million rubles. In both cases, the price will reflect the fact that the Russian currency is unreliable and has high volatility. From an economic point of view, de-dollarization will bring the country huge losses, but we are all accustomed to the fact that political necessity takes precedence over economic efficiency."

Quote 6 Signal. Rising prices: inflation is gaining momentum

the Rise in prices by 2018 will exceed the 3.4 percent projected by the Ministry of economic development, have recognized the head of the Ministry Maxim Oreshkin.

"On the background of the increase in VAT from 18% to 20% in early 2019, the CBR expects the acceleration of annual inflation to 5-5,5%, — the analyst specifies QBF Denis Ikonnikov. — Thus, the price rise is not a natural consequence of increasing income and consumption of the population, and in many respects is artificial".

And 5.5% inflation by the end of 2019 is optimistic expectations of the regulator. There are pessimistic: inflation could hit double figures. "According to our estimates, the probable recession in 2019, but already in 2020, the economy goes back to growth, in 2021, the growth rate will be comparable to the level of the baseline scenario, — said recently the Chairman of the Bank of Russia Elvira Nabiullina, speaking in the Duma. — Possible short-term surge in inflation to double-digit values, you need to tighten monetary policy, but it will carry a short-term effect".

Recall that the last time a double digit inflation in Russia was recorded in 2015 to 12.9%.

the Signal 7. Poor quality of economic growth

At the end of this year Russia's GDP should be little, but to grow. The Central Bank predicts growth of 1.5—2%, Ministry of economic development is 2.1%. The IMF expects growth of 1.7%.

"I'm worried about the poor quality of this growth, which comes mainly at the expense of exports, and most importantly, lack of growth drivers out-of-state investments: pessimism CFO at max for a few years, consumers save, savings, eat up," says Anton tabah.

"it is alarming the increase in oil dependence of the national economy, which comes amid the weakening of the ruble and the still relatively high oil prices, — said Roman Makarov. — Most of the 2018 ruble price of oil was at historic highs, which allowed oil producers to make enormous profits. Naturally, in such conditions in the first half, the share of oil revenues grew by 5 percentage points to 45.6%. In the context of excessively weak ruble many other sectors of the economy facing challenges: the decrease in income and purchasing power of citizens, the inability to import equipment and General growth of prices in the economy."

Concerned about the risks associated with the isolation of the Russian economy, the Chairman of the Board of Vesta Bank Victor Zhidkov. "Although there is some doubt that the insulation will come because the world has changed, says the liquid. Today there is a large number of new businesses that do not involve the presence of boundaries. Widespread globalization and digitalization leads to progress. The interests of international companies aimed at unification. Isolation from world markets helps during the international financial storms but in normal mode does not give us development."

the Signal 8. Investment is fleeing from Russia

funneling the money: how portfolio investment, and direct.

Total net capital outflow from the stock and debt markets of Russia funds investing in stocks and bonds of the Russian Federation for a week from 15 to 21 November 2018 reached 90 million US dollars against outflow of $ 40 million a week earlier, leads to EPFR Global. The net capital outflow from the Russian stock amounted to 60 million dollars (against 10 million in the previous week), and from bonds — 30 million (same as previous week). And this was the sixth week in a row, when the money goes from funds investing in bonds. All of this can be attributed to the global trend: the money now goes with almost all emerging markets. However, in Russia began and outflow of foreign direct investment.

In the third quarter of this year, the net outflow of foreign direct investment (FDI) reached $ 6 billion, which was an absolute record in post-Soviet Russia. The figure for January to September is still positive due to the influx of the beginning of the year. However, the indicator of nine months of 2018 was 11 times lower than in 2017 over the same period: 2.4 billion compared to 25.8 billion dollars.

"Is a sign of low confidence in the economy in connection with economic sanctions, and inability to diversify the economy and provide easier access to loans," says Christopher Dembek data on net capital outflows in the third quarter and its projected growth in the fourth quarter.

"Russia has three times reached the peak of capacity utilization: in 2007, 2012 and 2017 — said the head of Department of analysis and strategic marketing PSB Nicholas Kashcheev. And each time, starting from the second, GDP growth was twice lower than the previous. This means that we have failed in the investment field. And structurally, the economy is no longer working. The decision: project financing by the state. But in our case, in the present state of institutions, a road to nowhere."

the Signal 9. The risk of falling oil prices

Today is much more trouble cause by external factors, not the situation inside Russia, says the Director of the Department of risk management of the company "IQ g asset Management" Alexander Baranov.

"We will respond with absolute certainty, because it is the fall in world oil prices", — says the expert. There are several reasons to expect lower oil prices in the near future.

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first, a monetary policy in the US and Europe. "Over the past three years, the fed has already raised eight times the discount rate, with the result that it rose from 0.25% to 2.25%, and it not a limit, — said Baranov. — In December announced another increase in 2019, three in 2020 — two". Global markets are already responding with correction on expectations for a rate hike, and this correction will be even stronger if the fed will not abandon its plans, said Baranov. At the same time the European Central Bank in the middle of next year ends quantitative easing, that is, the policy of cheap money for the economy and goes into the rate increase. She is now about zero, so room for improvement there.

the Second negative factor is the debt crisis in Italy. "Italy's debt is 2.3 trillion euros, and in the following year, the country has to refinance 300 billion euros of debt — continues Alexander Baranov. — Nobody knows how Italy will survive this refinancing, given that its rating has dropped to BBB, i.e. to the border of investment grade. Judging by the volume of this debt crisis could be more serious than in Ireland, Greece or Cyprus".

Any economic contraction will cause a drop in demand for oil. "Oil prices are very responsive to the slightest fluctuations in demand — draws the attention of sheep. For example, in 1997, when there was a crisis in Southeast Asia, the imbalance of supply and demand was only 2.5%, and this has led to the fact that in ten months the price of oil fell by 2.5 times."

On the risk of lower oil prices, says Taras Chumachenko. "The cost of shale production in the U.S. decreased by almost two times in 2014 — it gives an example. — The three largest oil producers — Russia, USA and Saudi Arabia — now it will be difficult to agree on production cuts to hold the price".

Alexander Baranov also recalls additional pipeline capacity in Canada and the USA, which will be commissioned in the second half of 2019, will allow US to get more cheap oil on the domestic market and, therefore, reduce purchases from OPEC countries.

"Despite the stabilization of the situation in the Russian economy, it seems that the safety margin is still not enough without serious negative consequences to postpone the re-appearance of a shock," said Chumachenko.

Milena BAKHVALOVA, Banki.ru