Country Report Russia January 2009

Outlook for 2009-10

• The ruling "tandem" between the president, Dmitry Medvedev, and the prime minister, Vladimir Putin, is facing a difficult test amid efforts to cope with the rapid spread of the global financial and economic crisis to Russia.
• Although popular discontent at deteriorating economic conditions is yet to translate into significantly lower popularity ratings for Mr Putin and MrMedvedev, political risk in Russia is increasing.
• Poor relations with the West reflect conflicts of interest in a number of areas. There are hopes that the new administration in the US could open the way for improved ties in at least some areas, such as in arms control arrangements.
• Real GDP growth is forecast to slow to only 1% in 2009, from an estimated 6% in 2008, as a result of sharply lower commodity prices, restricted access to external financing and reduced external demand.
• The risk of a steep rouble devaluation represents the main threat to macroeconomic stability.
• Falling commodity prices and a sharp slowdown in demand growth will help to contain inflationary pressures. However, rouble depreciation will have an inflationary impact.
• The impact of much lower oil prices will push the current account into deficit in 2009, by a forecast US$50bn.

Monthly review

• Some opinion surveys suggest that the economic crisis is beginning to cause popular discontent. So far, the only significant mass protestsagainst an increase in tariffs on imported used carshave been reported in Vladivostok.
• Despite occasional hints by officials that Russia might join OPEC, Russia only requested to be upgraded from observer to permanent observer at the OPEC meeting held in Algeria in December.
• Hit by a lack of confidence, large capital outflows and weakening commodity sales revenue, the rouble has come under heavy pressure. The central bank has spent tens of billions of US dollars to prevent a sharp slide in its value.
• From a peak of US$598bn on August 8th 2008, reserves were down to less than US$430bn in mid-January.
• Economic performance deteriorated sharply in the fourth quarter in most sectors. Industrial output declined by 8.7% year on year in November, the largest contraction in a decade.
• Annual consumer price inflation eased to 13.3% in December, the lowest level since March 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;49
NAICS Code: 52;22

This report covers the following industry codes:
SIC Code: 60;49
NAICS Code: 52;22

• Highlights
• Outlook for 2009-10: Domestic politics
• Outlook for 2009-10: International relations
• Outlook for 2009-10: Russian relations with the US under Barack Obama
• Outlook for 2009-10: Policy trends
• Outlook for 2009-10: Fiscal policy
• Outlook for 2009-10: Monetary policy
• Outlook for 2009-10: International assumptions
• Outlook for 2009-10: Economic growth
• Outlook for 2009-10: Inflation
• Outlook for 2009-10: Exchange rates
• Outlook for 2009-10: External sector
• Outlook for 2009-10: Forecast summary
• The political scene: Signs emerge of growing popular discontent
• The political scene: Russia stops short of joining energy cartels, for now
• The political scene: There is little progress in arms control talks with the US
• The political scene: The Russia-Ukraine gas dispute
• Economic policy: Central bank tries to manage the pace of rouble weakening
• Economic policy: Subsidies to enterprises could lead to more state control
• Economic policy: Utility tariffs are increased in January
• Economic policy: The budget is still in surplus
• Economic performance: There is a sharp downturn in the fourth quarter
• Economic performance: Inflationary pressures ease
• Data and charts: Annual data and forecast
• Data and charts: Quarterly data
• Data and charts: Monthly data
• Data and charts: Annual trends charts
• Data and charts: Monthly trends charts
• Political structure