What hinders Russia

Overall, 2010 ended on a positive note. GDP growth was 4%, industrial production - 8.2%. However, the pre-crisis levels until they reach. The lag is typical for almost all key indicators: In addition to GDP and industry here, and exports and imports, and investment. If in 2008 the export value exceeded $ 471.8 billion, last year, despite more than 30 per cent increase relative to 2009, it reached only $ 400 billion in a similar situation with imports. After the jump by 29.5%, he stopped at $ 248.4 billion, and not reaching the level of two years ago at $ 292 billion on investment is even less impressive. Increase in investments in fixed assets for 2010 was 6%, but it obviously was not enough to compensate for the decline of 16.2% in 2009. And it is quite convincing, this growth is compared with the results of the pre-crisis 2007, when investments have added 21.1%. Real disposable money income for the year rose by 4.3%, whereas in 2007 was a record growth of 10.7%. But it should be noted that revenue growth of Russians even in the toughest conditions remained positive. His role was played by the state and regular indexation of pensions, and private employers, who in recent months, quite actively restored the levels of remuneration of its employees. The real sector. The greatest positive changes have occurred in manufacturing, where output increased by 11.8%. True, such a high rate - almost pre-crisis level - can not be attributed entirely to the real output growth. Last year, Rosstat introduced methodological changes in the calculation of the index associated with the weights: in the past used the structure of gross value added for 2002, now - in 2008. Changed, and nomenclature. The recalculated rate of growth allowed to bring sharp dynamics of industrial production in 2010 to pre-crisis levels. Based on new figures published by Rosstat, the forecast for 2011 is as follows: industry growth rate was 6.9%, mining and quarrying increased by 2.4%, output in manufacturing - by 10.2% in the production and distribution of electricity, gas and water supply - by 2.9%. Invincible inflation. Quite successful (statistically) the real sector is in contradiction with the price processes that have evolved in the past year is unpredictable. Here, all predictions have not withstood the onslaught of inflation, which eventually amounted to 8.8%. To the greatest degree of increased food prices (12.9% vs. 6.1% in 2009), which was mainly due to rise in price of domestic agricultural and food imports. The contribution of this group of commodities in general, inflation was significant - 4.7 percentage points. The growth of prices for certain types of goods has been particularly intense. So, fruits and vegetables per year has risen by 45.6%, whereas in 2009 it fell by 1.7%. The main reason was the increased cost of summer drought, which resulted in lost over a third of the crop. Significantly increased the prices for socially important food products: cereals and legumes (58.8%), sunflower oil (27.6%), butter (23.3%), sugar (22.5%) milk and dairy products (+16.7%). Obviously, the situation on the domestic market and imported inflation from international markets can not expect a slowdown in price growth in Russia. Acceleration will contribute to the increase of excise duties on petrol and tobacco products, and most importantly - increase in the total premium rates from 26 to 34%. In this case there are still traditional and raise utility tariffs and state monopolies. Therefore, inflation in 2011 could be at a level no lower than 10%. Not just consumers. The growth of producer prices of industrial products last year was 16.7%, the increase in the basic industry sector was almost the same level. In the extraction of minerals prices rose by 17.1% (their contribution to industrial inflation was 3.5 percentage points), in manufacturing - by 16.9% (contribution - 12.4 percentage points), and in the production and distribution of electricity , gas and water supply - by 13.8% (contribution - 0.8 percentage points). At the same time the beginning of 2011 promises to sufficiently high inflationary background in the industry, and it is connected not only with the usual monopoly tariff increases. According to a special survey of the Economic Policy Institute named Yegor Gaidar (EPI), 70% of companies are ready to continue to raise their prices in response to rising health insurance premiums (the former UST). According to our forecast, industrial inflation this year will be at least 18%. Low productivity. Last year, a trend of relative stability in an economy with moderate growth rates. Will there be an opportunity to accelerate recovery - depends on how successful Russia will be able to deal with key issues related to the use of labor and capital. For businesses, outpacing wage growth against the background of the delayed recovery of production means higher costs. To understand this phenomenon, it is necessary to assess the overall situation on the labor market. The main trend in recent years and the apparent trend in the coming years will be a declining labor supply. The Russian population is shrinking, which means that the market goes less and less new workers. Moreover, due to a sharp drop in investment in higher and secondary vocational education in the transition to new market conditions the quality of the new labor force also leaves much to be desired. That is, people are becoming less and less, and their professionalism is falling. Consequently, skilled labor naturally grows in value. Throw in features and structure of the economy. The main part focuses on the issue of mining companies that have a significant advantage over other industries. Labor's share in the cost structure in the mining sector is relatively low, and working in the subject company will pay for skilled labor with little attention to price, because the high level of profitability allows it. In addition, Russia is not a national labor market, and the collection of regional markets illiquid. For areas with a high level of demand from industry, this means the need to pay higher prices for their labor. The cost of labor in some sectors already very close to international standards. At the same time in terms of productivity by 3-8 times Russia lags behind developed countries. To accelerate the development requires the release of the workforce through increased efficiency of the employed population while increasing the liquidity of the labor market. The main role in solving this problem is to play the state. The efficiency of investment. The main sources of investment financing for 86% of enterprises were own funds, to 31% - credit and debt resources. Foreign investment in the first three quarters fell by 13% compared with 2009 levels. Investing in Russia dearly. Comparable facility investments in developed countries, in India or in China will cost 30-50% less. At the same time, the project will also require much less. The main reason for one - corruption, the importance of which in recent years is growing. But she says not all. A recent report by the Accounting Chamber on investment projects in Moscow have shed light on some of the problems with investment in Russia. We call one of them - the standard of investment decisions. Audi-tors felt that if the new subway station in Moscow were performed on one sample, the cost of their construction would have decreased by 2.5-3 times! Good potential for optimization of large infrastructure projects that are now unfolding across the country. So, for success requires reduction of corrupt appetites while simultaneously standardizing approaches to similar investment objectives. And much depends on the simple political will to change the situation. Enough power to give an example: the emergence of private foreign investors in the industry - E. On, Enel, Eni - is now clearly indicate what should be a new megawatts of power. In this case, we note that progress to optimize capital investment in the public sector (including state companies) will have an impact on private businesses. For now the state-controlled companies are the main consumers of financial resources from capital markets. Given the size of their investment needs, it is easy to understand that even 30-40% efficiency there will be enough to create an entirely new environment for financing private sector projects. Especially if these changes were complemented by alleviating the administrative burden for the industries that are outside the "strategic focus" state. How long is enough? Thus, in the coming year, much will depend on the state of conscious choice. Even minimal changes may be enough for a major shift in the situation. Of course, the likelihood of such a development is quite low. And the release of the employed labor force is ineffective, corrupt and reduced components of investment are clearly beyond the capacity of political authorities, especially in view of the election date. As a result, the economy is likely to go the traditional scenario. The influx of export proceeds at a relatively high world commodity prices partially transformed to increase investment in part - to increase incomes, and partly - in inflation and the declining competitiveness of the domestic industry. The economy will move moderate rate of recovery. According to our forecast, GDP will grow by 3.3%. Investments increased by 5.7%, and not approaching the pre-crisis levels. Real disposable income will rise by 4.3%. Because of the de facto stagnation in export volumes in terms of value increased by less than 1.7%, while imports will add 9.8%. In other words, Russia will continue to evolve within an already familiar story. The only question is whether such a story to last forever. * Authors - Institute of Economics, Academy of Sciences. Macroeconomic indicators Indicators Year Forecast Institute of Economics of the Ministry of Economic Development 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 I II variant version of GDP,% to previous year 106.4 110.0 105.1 104.7 107 3 107.2 106.4 107.4 108.1 105.6 92.1 104.0 * 103.3 103.2 104.2 to 1999 100.0 110.0 115.6 121.0 129.8 139.3 148.2 159.2 172.1 181.7 167.3 174.0 179.7 179.6 181.3 Industrial production,% of previous year 108.9 108.7 102.9 103.1 108.9 108.0 105.1 106.3 106.8 100.6 90.7 108.2 106.9 102.8 104.1 100.0 to 108.7 in 1999 111.9 115.4 125 7 135.8 142.7 151.7 162.0 163.0 147.8 160.0 171.0 164.5 166.6 Products of agriculture,% of previous year 104.1 107.7 106.8 101 , 5 101.5 103.1 102.0 103.6 103.3 110.8 101.2 88.1 103.1 105.6 109.3 100.0 to 107.7 in 1999 115.0 116.7 118.5 122.2 124.6 129.1 133.4 147.8 149.6 131.8 135.9 139.2 144.1 Investment in fixed assets,% to previous year 105.3 117.4 110 , 0 102.8 112.5 113.7 110.9 113.7 121.1 109.1 83.8 106.0 * 105.7 107.3 109.0 100.0 to 117.4 in 1999 129 1 132.7 149.3 169.8 188.3 214.1 259.3 282.9 237.1 251.3 265.6 269.6 273.9 Retail trade turnover,% of previous year 94.2 109 , 0 111.0 109.3 108.8 113.3 112.8 114.1 116.1 113.5 95.1 104.4 104.8 104.6 104.8 100.0 to 109.0 in 1999 121.0 132.3 143.9 163.0 183.9 209.8 243.6 276.5 263.0 274.6 287.8 287.2 287.8 Money supply M2 billion at year-end 714 , 6 1154.4 1612.6 2134.5 3212.7 4363.3 6045.6 8995.8 13272.1 13493.2 15697.7 20173.5 24822.2 na Sf % Over previous year 157.5 161.5 139.7 132.4 150.5 135.8 138.6 148.8 147.5 101.7 116.3 128.5 123.0 na sf % By the year 1999 100.0 161.5 225.6 298.7 449.5 610.4 846.0 1258.8 1856.7 1888.3 2196.1 2822.0 3471.1 sf sf The index of consumer price (December of the year to December of previous year) 136.5 120.2 118.6 115.1 112.0 111.7 110.9 109.0 111.9 113.3 108.8 108.8 109.6 106,0-107,0 106,0-107,0 Real disposable money incomes of population,% of previous year 87.7 112.0 108.7 111.1 115.1 109.9 109.3 113 , 3 110.7 102.7 101.9 104.3 104.8 101.9 103.3 to 1999 100.0 112.0 121.7 135.2 155.6 171.0 186.9 211.8 234.5 240.8 245.4 256.0 268.3 260.9 264.4 Exports: $ billion 75.6 105.0 101.9 107.3 135.9 183.2 243.8 303.6 354 , 4 471.8 303.4 400.0 406.8 387.0 414.3% over previous year 101.5 139.0 97.0 105.3 126.7 134.8 133.1 124.5 116, 8 133.1 64.3 131.8 101.7 102.4 105.0% by the year 1999 100.0 139.0 134.8 141.9 179.8 242.4 322.6 401.6 469.1 624.4 401.5 529.2 538.2 541.9 555.7 Imports: $ billion 39.5 44.9 53.8 61.0 76.1 97.4 125.4 164.3 223.5 292 , 0 191.8 248.4 273.4 277.0 286.2% of previous year 68.1 113.7 119.8 113.4 124.8 128.0 128.7 131.0 136.0 130, 6 65.7 129.5 110.1 113.5 115.1% by the year 1999 100.0 113.7 136.2 154.5 192.8 246.8 317.6 416.1 565.9 739.1 485.6 628.9 692.4 713.8 723.9 Oil price brand Urals: $ / barrel 17.2 26.7 23.0 23.7 27.2 34.4 50.6 61.1 69.3 94.1 61.1 78.1 75.7 75.0 81.0% over previous year 144.5 155.2 86.1 103.0 114.8 126.5 147.1 120.8 113.4 135 8 64.9 96.9 127.8 96.0 103.7% by the year 1999 100.0 155.2 133.6 137.6 158.0 199.9 294.1 355.3 402.9 547, 1 355.1 453.8 439.7 435.6 470.6 Real effective exchange rate of ruble against foreign currencies (December of the year to December of previous year) sf Sf sf 97.7 104.1 104.7 110.5 107.4 105.1 104.5 96.2 107.1 107.6 103.1 106.1 Note. Forecast of Economic Development presented on the basis of official figures posted on the website of the Ministry of December 17, 2010. * Estimated. Sources: Rosstat, Ministry of Economic Development, the Bank of Russia, the IE RAS dynamics of industrial production,% of previous year Activities Year Forecast Institute of Economics 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * 2011 Mining 106.4 106.0 106 8 108.7 106.8 101.4 102.8 103.3 100.4 99.4 103.6 102.4 of which: mining and quarrying of energy producing materials 104.9 106.1 107.3 110.3 107.7 101.8 102.7 102.7 100.1 100.4 103.1 101.0 Manufacturing 110.9 102.0 101.1 110.3 110.5 107.6 108.4 110.5 100.5 84.8 111.8 110.2 of which: manufacture of food products, beverages and tobacco 105.3 108.0 107.2 106.9 104.4 106.6 107.3 107.3 101 , 9 99.4 105.4 106.3 textile and clothing manufacturing 124.9 107.8 97.5 101.2 96.0 103.6 111.8 99.5 94.6 83.8 112.1 108, a production of leather, leather products and footwear 107.6 113.7 111.4 111.5 99.4 100.2 122.0 102.3 99.7 99.9 118.7 117.6 Production and Wood Processing wood products 114.1 97.5 104.2 109.7 108.7 107.1 103.6 107.9 99.9 79.3 111.4 112.8 Pulp and paper production, publishing and printing 118 0 109.6 104.1 107.8 105.1 103.6 106.7 108.3 100.3 85.7 105.9 105.7 manufacture of coke and petroleum products 102.4 102.8 104.6 102.2 102.4 104.4 106.6 102.8 102.8 99.4 105.0 103.2 chemical manufacturing 115.2 100.3 100.2 105.4 106.6 104.1 104.7 106.6 95.4 93.1 114.6 110.4 Production of rubber and plastic products 126.1 101.6 100.2 105.5 113.5 116.4 121.0 125.5 122.8 87.4 121.5 127.0 Production of other nonmetallic mineral products 110.6 103.8 101.2 107.3 108.4 104.9 114.2 108.3 97.1 72.5 110.7 113.8 manufacture of basic metals and fabricated metal products 115.3 104.6 105.1 107.2 103.9 107.0 109.7 104.5 97.8 85.3 112.4 110.4 Machinery and equipment 105.7 106.4 91.2 119.0 120.8 99.7 111.7 126.7 99.5 68.5 112.2 110.9 Production of vehicles and equipment 110.7 73.6 99.0 114.0 111.5 107.1 104.7 107.8 100.4 62.8 132.2 127.5 Production and distribution of electricity, gas and water 104.0 101.4 104.8 103.3 101.1 100.9 103.4 99.4 100.6 96.1 104.1 102.9 Industry as a whole 108.7 102.9 103.1 108.9 108.0 105.1 106.3 106.8 100.6 90.7 108.2 106, 9 * rating. Sources: Rosstat, IE RAS