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15 Jan, 2010 09:08

The Economic Outlook

The Economic Outlook

With the economy looking to rebound from the recession of 2009 RT spoke with a range of Moscow based Economists and analysts about how the numbers are panning out for 2010.

We asked about key economic indicators including GDP growth, inflation, unemployment, oil, currencies and interest rates.

The outcomes in numbers are below.

Key Economic Indicators:

Macro Outlook

MED Uralsib UBS FBK Troika Dialog Otkrytie FC Deutsche Bank GDP 3.1% 5.5% 5.6% -2% to -4% 5% 3.1% 3.8% Inflation 6.5-7.5% 9% 8.5% 9-11% 5-6% 9% 8% Oil (Urals) $65 $71.5 $50-55 $70 $75 $65 Rouble/Dollar 28.1 36.3 >35 29-30 29 Unemployment 8.6% 2.8 mln

In their own words:

GDP/Economic forecast:

Vladimir Savov, head of the analytical department at Otkrytie FC

“The main drivers will be the industries oriented on domestic demand, retail, services, banking, and telecoms, followed by construction, real estate, and machinery later in the year . These were the sectors that were hit the most from the decline and, we think, they will be the ones to really start recovering.”

“We have this 3 % growth rate, which is obviously not very much when we had the economy growing by 8 % in 2007. It’s only to a degree the beginning of a recovery whereby it will take another two, three years maybe more where we will see the real GDP growing to the pre-crisis level of 2007.”

Sergey Shapiguzov, FBK President

“The crisis appeared to be a much easier obstacle in comparison with those negative factors which are accumulated in our economy. So far we have managed to overcome a certain phase of crisis. That said, there are new challenges ahead. Therefore, I believe 2010 will be a year of adaptation to the crisis, the period of strategic decisions will begin when savings of former years are over. It will give a powerful incentive to the development of a market economy or re-birth of the State plan.”

Vladimir Sokolin, Chairman State Statistical Committee

“We can truly say what will happen to our economy only starting from April-May of 2010. Russia has to wait for the rise of western economies since it didn’t manage to change its economic model and climb down an oil needle.

“I expect production to recover after a 10% dramatic fall in 1H 2009, which was due to massive destocking. Currently output is recovering, and demand is correcting and, I think, this will be followed by a recovery in credit markets in 2010.”

Anton Struchenevsky, a senior economist at Troika Dialog

“2010 will be brand new, neither a recovery nor a correction. It’ll be a shift to a quality new economic model, more adequate and reliable. The industries that satisfy daily demand, like food and pulp and paper ones, will be the economic locos.”

“Before Russia’s economy was developing too fast, thus suffering so – called “growth diseases” and inefficient usage of resources both in private and governmental sectors. Now it’s heading for a more stable pattern.”

Yaroslav Lissovolik, chief economist at Deutsche Bank

“A change of an economic paradigm will be the main trend in 2010. As I see it, the upward trend in a consumer sector at the beginning of 2010 will be followed by an upturn in metallurgy and processing. This will be largely due to investment into infrastructure replacing massive social expenditure.”

Igor Nikolaev, Director of Strategic Analysis Department of PKF

“The second wave of crisis is more than probable and we are expecting repetition of what we had in the second half of 2008: stock indices decrease, and what’s worse for Russian economy, fall of the world’s oil prices.”

“We will see that if we look at the tendencies in retail. In September 2009 turnover was record low – minus 9.9% against the same period in 2008. The investment dynamic is not the best either: in September 2009 minus 18.6% in comparison with September 2008. The October numbers are not much better: minus 8.5 and 17.9% respectively.”


Vladimir Savov, head of the analytical department at Otkrytie FC

"Inflation will be showing the same trend the last several months, we project 9 percent for next year, perhaps a bit higher than the government, we think that with the budget continuing to spend a lot of pensions and social safety, some inflation will be inevitable, but is still lower than in previous years."

Clemens Grafe, a chief economist for Russia and CIS countries at UBS

“Russia should aim for 5% inflation and keep it there.”


Vladimir Savov, head of the analytical department at Otkrytie FC

“Our forecast is that oil will be relatively stable, slightly growing, and our level for next year is around $75 per barrel. We think that earlier in the year prices could be lower than that, but later toward the same half of the year, as evidence of global economic recovery is mounting, the prices could start to grow more sustainably, but roughly we see the prices at the level where they are today.”


Vladimir Savov, head of the analytical department at Otkrytie FC

“We think that if oil prices remain within the current levels, then the Rouble will also remain relatively stable, with maybe a little appreciation for a forecast of 29 Roubles.”

Clemens Grafe, a chief economist for Russia and CIS countries at UBS

“Russia´s monetary authorities need to have more flexibility on the Rouble and they need help from the ministry of finance.”


Vladimir Savov, head of the analytical department at Otkrytie FC

"I think we will se an improvement from the current levels as industry starts employing again, with more improvement to come in the 2nd and 3rd quarter of the year."

Igor Nikolaev, Director of Strategic Analysis Department of PKF

“The current improvement in the Russian economy is due to growing exports, but these improvements are not steady. In 2010 inflation will be 9-11% with 2.8 million of registered unemployed.”


Vladimir Savov, head of the analytical department at Otkrytie

"Probably if we see further slowdown in inflation, the CB may cut the refinancing rate further. Maybe one percentage point lower is possible. But at the end of the day, what matters is at what rates the commercial banks will be lending for the economy. We see today that the CB rate is below 10 %, while the rates on loans have actually not changed and are quite high. How much the CB cuts from these levels matters only to a small degree, it’s how the banks lower their rates. It will take a bit longer. I think, the banks are still afraid of non performing loans and will lower rates only when they see that the process of increase of bad loans in their books has really stopped which, I think, will be probably in the 2nd or the 3rd quarter."

Retail Banking:

Anton Struchenevsky, a senior economist at Troika Dialog

“Next year will be quite challenging for Russia’s banks as they will have to learn to work in a new economic environment, where the inflation is going down and the gap between credit and deposit rates is shrinking.”