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adminApril 9, 201915 Mins read99 Views

Business https://russia-insider.com/en en news russia Russia Insider Thu, 28 Mar 2019 08:16:34 -0400 Thu, 28 Mar 2019 08:24:24 -0400 <a href="/en/business/russias-industry-and-financial-war-chest-grow-world-economy-turns-gloomy/ri26642" title="[field_meta_title]">Russia's Industry and Financial War Chest Grow as World Economy Turns Gloomy</a> https://russia-insider.com/en/business/russias-industry-and-financial-war-chest-grow-world-economy-turns-gloomy/ri26642 This article originally appeared at the <a href="https://www.awaragroup.com/" rel="nofollow">Awara Accounting</a> blog as Awara Accounting <a href="https://www.awaragroup.com/blog/russian-economy-brief-march-2019/?fbclid=IwAR2pZKfi-VJ3tYufOpUJk1Bre_Zj5w6p7qducWKmJALpSbhnela3Z91G3bg" rel="nofollow">Russian economy brief March 2019.</a> <hr /> The year has started on a very optimistic note for Russia. Its been so good that the liberals are crying foul. Industrial production keeps climbing up. After a strong performance in 2018, industrial production grew 2.6% in January through February, including by a staggering 4.1% in February. The subsector manufacturing was an especially bright spot delivering a mouthwatering 4.6% growth. <div class="media-p"> <img height="822" width="1200" class="media-element file-default img-responsive" data-delta="1" src="https://russia-insider.com/sites/insider/files/styles/1200xauto/public/main/2019-Mar-27/putin_gold_2_.jpg?itok=mmNw9jV9" alt="" /><figcaption class="field-caption"> Russia's war chest is brimming as Putin hoards gold </figcaption> </div> Inflation has remained low. Although the VAT rate was raised with two percentage points (more than 1/10th, now 20%) the incremental effect of it on inflation was less than one percentage point, giving an annualized inflation of 5.2% at end of February. Unemployment continued its positive downward trend was only 4.9% in February. The low unemployment has put pressure on salaries which have been rising above inflation. The effect was seen also in a 2% growth in February retail sales. The strong economic recovery has translated in solid federal budget surpluses: In 2018, 2.7% (as a share of GDP) and 2% by February 2019. Contrary to the US and the EU, for Russia this is all real money which comes through organic growth and not central bank money printing. The GDP grew 2.3% last year. We at <a href="https://www.awaragroup.com/" rel="nofollow">Awara Accounting</a> expect a growth of 2% or above for this year. This is pending uncertainties in the global economy. Russian finances are super solid The budget surpluses are filling Putins war chest especially when we remember that Russia has the absolutely lowest level of debt of all major countries. In comparison with the US and the other big Western countries, we could say Russia is practically debtless. But thats not all. The strong economy has also enabled Putin to continue hoarding gold, adding since year end $5 billion worth of gold to the coffers. The Central Bank bought 31.1 tons of gold just in February. Russias gold reserves are now worth $92 billion, included in a total of $483 billion central bank reserves. (Up by $15 billion by February). And more. While the going is good, Russia decided to tap the foreign bond markets, too, hauling in $7.2 billion worth of funds at attractive rates (5.1% for dollar bonds maturing in 2035). Russia does not need the money as such but just wants to fill the chests as long as there are willing foreign investors to give it away. The Russian Finance Minister <a href="https://www.bloomberg.com/news/articles/2019-03-25/russia-battens-down-hatches-with-7-2-billion-borrowing-spree" rel="nofollow">Anton Siluanov said</a> that raising this huge amount abroad also enables the Government to cut down on domestic borrowings and so easing access for local companies to borrow. Imports from the EU and Germany collapse as China grows Russian foreign trade stats for January delivered shocking figures which all observers seem to have missed so far. Imports from the sanctions-happy EU – which has been Russias main supplier since the demise of the USSR – crashed through the ceiling with a 14% decline. Worse yet for Germany, who saw its exports to Russia cut by 22% from January 2018 leaving a value of only $1.2 billion. At the same time, imports from friendly China grew with a healthy 6%. As a result Russias imports from China (26% of total) are now three times bigger than those from Germany (7.8%). Total imports from the EU now make up only 30% of all Russias imports. We stress the importation figures, because of their twofold importance. Low levels of imports from the EU and high ones from China, Asia and other parts of the free world show that Russias dependence on that hostile block has diminished and it can get all it needs – if not domestically produced – elsewhere. The other aspect of this is the mirror image, it shows how the EU countries have shot themselves in the foot by slavishly adhering to the American sanctions against Russia. We do not have the details yet on February but the overall decline in imports was 5.6% in February vs. 1.2% in January. This would point towards a continued trend along the lines depicted above. Liberals dont believe it It is indeed remarkable that a countrys imports fall so strongly at the same time as the other macroeconomic figures show solid growth. There is only one explanation for that, and that is import substitution. Import substitution is the magic word by which Putin countered the Western sanctions and made one better. “If you dont want to sell, well make our own stuff.” And its an absolute killer as weve seen. This is precisely what the liberals dont get. Russia revised – for completely understandable reasons – end of 2018 the components that make up GDP (namely, construction) and following it the GDP for 2018 was higher than previously expected at 2.3%. “Something fishy here,” <a href="https://www.bloomberg.com/opinion/articles/2019-02-05/russia-s-latest-economic-data-are-suspiciously-optimistic" rel="nofollow">they cried</a>. Then came the remarkable industrial production figures and nice GDP. “We told you so…This cant be right…Its because Putin replaced the chief for the statistics agency..<a href="https://www.rferl.org/a/those-fishy-looking-russian-economic-stats-look-a-lot-like-those-fishy-looking-soviet-economic-stats/29764301.html" rel="nofollow">.bla, bla, bla.</a>” The libs then enumerated <a href="https://www.rbc.ru/economics/18/03/2019/5c8fa9549a7947d476c60065?from=newsfeed" rel="nofollow">a long list</a> of things why the February growth figure is either wrong or just a one-timer. I tell them: Put two things together, under overall conditions of growth a sharp drop in imports is offset by strong growth in domestic manufacturing. It is as easy as that. Global economic situation The good news about Russias economy come at the same time as dark clouds are gathering over the global economy. The European economic engine has come to a near standstill as no amount of free money from the European Central Bank can seem to move that wreck. Perhaps it is precisely the gratuitous central bank financing to prop up the virtually bankrupt banks and governments combined with senseless austerity on the people, which has destroyed the European economy. Germanys growth engine, its exports are stalling. The country is hovering at the brink of recession after contracting in the Q3 2018 and reporting zero growth in Q4. The problems compounded in the new year as factory output contracted for the first time in four years, as it did in France, too. Its bad all over Europe. February 7, the European Commission cut its 2019 forecast for euro zone economic growth to just 1.3%. It is a rule that the Commission gives over optimistic growth forecasts, therefore as this downgrading came so early in the year, the Commission must in fact expect something yet much worse. Things are no better in the US, where Trump is flooding the country with debt just to keep it afloat. Since Trump took office, the US has added over $2 trillion in new national debt, bringing the total to $22 trillion. That is not counting the debt of states and cities, which is how national debt is accounted for in other countries. To account for that, you would have to add some $3 trillion to get the real national debt of $25 trillion. That gives a ration of 120% debt-to-GDP, which puts the US into the absolute top indebted nations up there with Italy. The trillion dollar deficits foreseen by Trumps budgets will further add some $1.5 trillion annually to the debt. The growth of debt is higher than the deficit, because the new debt accrued each year is much more than the reported GDP growth (which probably is inflated as such). This means that whatever growth there has been – and will be – is entirely a debt fueled illusion. Here is a link to our recent report on the <a href="https://www.awaragroup.com/blog/signs-that-the-us-debt-fueled-economy-might-actually-collapse/" rel="nofollow">dire state of the US economy</a> and its inherent risks. Last week analysts poured fuel on the fire alerting to heightened US recession fears as the US Treasury yield curve recently dramatically inverted. Also in Japan, the worlds fourth biggest economy factory output posted a shocking 3.7% decline in January, which is blamed on the Trump trade wars. South America is looking bad, too. In December 2017, Mauricio Macri (thats almost Macron) was sworn in as Argentinas president, the neocons were back, and sure enough, it didnt take long for the IMF being again to clean up the mess and launch yet more austerity. Now, Argentinas only best hope is that Cristina Fernández de Kirchner can reclaim the office in presidential elections this fall. The Brazilian elite pretty much ruined the countrys economy with the coup against Dilma Rousseff and the fake presidential elections this year, which saw the top candidate, former president Lula, jailed on fabricated charges. The new president Bolsonaro has taken an aggressive stance against China, which is both the biggest investor to Brazil and its biggest export market. Instead Bolsonaro is cozying up to Trump, but with economic problems of its own and Trumps America First policy, there is no way that the US can replace China either as an investor or an export market. Fortunately, China is still going strong. The Western business media try to sell us the story that China is supposedly stagnating because growth has declined. But in reality, it is the growth rate that has declined, while absolute growth is still strong. It is only natural that the rate should diminish as the economy gets bigger. China is now the worlds absolute biggest economy, way ahead of the US, and it is still growing more than 6% a year. And thats great. The analysts also exaggerate Chinas debt problem. In this sense, China is much better off than most of the Western countries. As the world stands today, we certainly prefer to be invested in Russia. You might also be interested in our big Awara Accounting report on the Russian economy in 2018. You can <a href="https://www.awaragroup.com/blog/russian-economy-strong-and-stable/" rel="nofollow">download it here. </a> Awara Accounting recently completed a series of reports on the amazing development of Russias infrastructure. These are: 1. <a href="https://www.awaragroup.com/blog/all-the-amazing-airports-of-stagnating-russia/" rel="nofollow">All the Amazing Airports of “Stagnating Russia”</a> 2. <a href="https://www.awaragroup.com/blog/impressive-progress-of-russian-roads/" rel="nofollow">With Putin Russia is Finally Getting Proper Roads – The Progress is Impressive </a> 3. <a href="https://www.awaragroup.com/blog/putin-the-pontiff-bridge-maker/" rel="nofollow">Putin the Pontiff – Bridgemaker. The Astonishing New Bridges of Russia</a> <figure class="field-image"> <enclosure url="https://russia-insider.com/sites/insider/files/styles/large/public/main/2019-Mar-27/putin_gold_2_.jpg?itok=8HiGN840" length="21548" type="image/jpeg" /> </figure> Thu, 28 Mar 2019 08:03:16 -0400 Business <a href="/en/russia-showing-its-best-weapons-ak-200-rifles-t-90-tanks/ri26434" title="[field_meta_title]">Russia is Showing Off Its Best Weapons; From AK-200 Rifles to T-90 Tanks</a> https://russia-insider.com/en/russia-showing-its-best-weapons-ak-200-rifles-t-90-tanks/ri26434 Since 2010, Rosoboronexport– Russias state defense export agency– has made great strides in breaking into the Southeast Asian arms market. However, parts of the Middle-East present a much more challenging landscape. In particular, Rosoboronexport has yet to make meaningful headway in the lucrative Persian Gulf market where major defense system contracts still tend to go to the United States. As Russian arms exporters make a concerted push into the Gulf states, there is no better opportunity for them to give their sales pitch than at the largest arms show in the Middle East: IDEX, a biennial exhibition organized by the United Arab Emirates. From tanks to air-defense systems, Russia entered IDEX 2019 with one of their most ambitious lineups in years. Will Russia succeed in wooing Gulf state importers? Here is what they showed. The centerpiece of Russias exhibition was the unveiling of their new Pantsir-ME shipborne air defense system. Rosoboronexport executive Alexander Mikheev expressed optimism about its market competitiveness: “Pantsir-ME can be installed on most Russian warships and is very well fit for ships manufactured by other countries… I am confident that it has very good export prospects in the Arab countries, southeast Asia and Latin America. Boasting a unique, “completely automated” dual missile-artillery system with a range of up to 15 kilometers, the manufacturer claims that Pantsir-ME is the first seaborne defense system of its kind. <div class="media-p"><div class="media file-default"> <img height="541" width="1000" style="height: 325px; width: 600px;" class="media-element file-default img-responsive" data-delta="2" src="https://russia-insider.com/sites/insider/files/styles/1200xauto/public/1055128669.jpg?itok=BAd2znvF" alt="" /><figcaption class="field-caption"> Pantsir-ME </figcaption> </div></div> A more traditional artillery solution comes in the form of the AU220M “Burevestnik” 57 mm cannon, capable of firing 80 high-explosive (HE) or armor-piercing (AP) rounds per minute. In a reflection of where Rosoboronexport thinks the Middle-Eastern and Latin American markets are going, the manufacturer made a point of stressing that Burevestnik can also be fitted on certain Russian military vessels. Russias flagship tank offering remains the T-90MS, a modernized export variant of the T-90 battle tank that served as Russias staple heavy armor solution through 2011. As previously covered by The National Interest , its improvements include a new onboard display, new 360-degree camera system, a more powerful 1,130 horsepower V-92S2F diesel engine, and a revised explosive reactive armor (ERA) system. <div class="media-p"><div class="media file-default"> <img height="400" width="600" class="media-element file-default img-responsive" data-delta="1" src="https://russia-insider.com/sites/insider/files/styles/1200xauto/public/2l-image-52.jpg?itok=CiI08St3" alt="" /><figcaption class="field-caption"> T-90MS main battle tank </figcaption> </div></div> These upgrades dont come cheap, however; whereas the prior T-90 export model costs 2.5-3.5 million dollars, the T-90MS comes in at 4.5 million. Unlike its more affordable predecessors, the T-90MS is Russias attempt to target the higher segments of the heavy armor market. In what Russian exporters are sure to take as a positive sign of market interest, Egypt and Kuwait are on the verge of finalizing T-90MS contracts. Russias flagship small firearms offering is the AK200 series, a set of AK-12 variants cleared for export less than a week before IDEX 2019. The series consists of six rifles from the AK-200 to the AK-205, differentiated by compact and full-size options as well as three caliber choices: 7.62x39mm, 5.45x39mm and 5.56x45mm NATO. <div class="media-p"><div class="media file-default"> <img height="319" width="1024" style="height: 187px; width: 600px;" class="media-element file-default img-responsive" data-delta="4" src="https://russia-insider.com/sites/insider/files/styles/1200xauto/public/ak200-.jpg?itok=t52Gya3g" alt="" /><figcaption class="field-caption"> 5.45mm Kalashnikov AK-200 assault rifle </figcaption> </div></div> On the more experimental end, also making an appearance are Kalashnikovs new KUB-BLA suicide drones. “KUB-BLA is designed to destroy remote ground targets,” Kalashnikov explained at the exhibition . “An unmanned aerial vehicle delivers a special load to the coordinates of the target, which are set manually or in the image from the [drones] guidance system.” The KUB-BLA is the latest, striking example of Kalashnikov Groups aggressive attempts to diversify beyond the small firearms industry. When it comes to establishing a foothold in the highly competitive, politically fraught Gulf market, Rosoboronexport has their work cut out for them. Nonetheless, Russias ambitious lineup of air defense systems and modernized heavy weapons speaks to a rising confidence in their ability to carve out a greater slice of the high-end arms market over the coming decade. <figure class="field-image"> <enclosure url="https://russia-insider.com/sites/insider/files/styles/large/public/main/2019-Mar-3/indian_army_t-90.jpg?itok=Bhnl58q-" length="26326" type="image/jpeg" /> </figure> Sun, 3 Mar 2019 11:03:30 -0500 Business <a href="/en/business/eu-reeling-yellow-vest-protests-what-happens-if-there-debt-crisis/ri25932" title="[field_meta_title]">EU Reeling From Yellow Vest Protests. What Happens if There Is a Debt Crisis?</a> https://russia-insider.com/en/business/eu-reeling-yellow-vest-protests-what-happens-if-there-debt-crisis/ri25932 There is a lot of talk about which economic bubble will burst first and burst the worst (sounds like a gangsta rap song, no?) The stock market, real estate, luxury goods, corporate debt and government bond bubbles, and other lesser bubbles, all jockey for the titles. Its the “<a href="https://wolfstreet.com/2018/12/16/the-wolf-street-report-peak-everything-bubble/" rel="nofollow">Everything Bubble</a>” for good reason. The “good reason” is: the 1% owns everything of high value, so if Western governments make it their policy to inflate those valuations even higher, then the 1% regains everything they lost in 2008. Welcome to Western Liberal Democracy – if you have a seat in the House of Lords Im sure youre not suffering too badly. Because of that “good reason” I listed all of these bubbles are worse now than in 2008. Nothing was learned and nothing was delivered: I am not a doomsdayer, but these kind of facts <a href="https://thesaker.is/great-recession-at-10-500k-wine-jailing-black-footballers-for-insider-trading/" rel="nofollow">make me write</a> that Great Recession II (Great Depression II?) is around the corner. However, not all bubbles are created equal: The luxury goods bubble, for example. Its mildly interesting, from a sensational news aspect, that the most expensive bottle of wine is now worth $558,000…but the luxury goods market is a minuscule part of every nations “real” economy, excepting France, Italy and Switzerland. Back in 2008 a half-million dollars set the record for largest lot of wine ever – 27 bottles – so these stories only prove the existence huge asset inflation (bubbles) – 1/27th in the area of wine sales. The stock market bubble is also mainly a rich-persons problem – we only hear about it so very often because…the rich own the media in the West, and the coverage thus reflects their interests. Yes, 52% of Americans own stock, because its a huge part (stupidly, rapaciously) of the American private pension system, but <a href="https://www.financialsamurai.com/what-percentage-of-americans-own-stocks-or-real-estate/" rel="nofollow">only 18% own stock directly</a> and can buy and sell at will. We all know that stocks no longer have any correlation to a companys actual performance and prospects; those really paying attention also know that the Great Recessions bailout money has been used for stock buybacks, which raise the stock price. That bubble is ending, too: taxpayer-funded stock buybacks <a href="https://www.forbes.com/sites/jessecolombo/2018/12/31/when-the-stock-buybacks-go-bye-bye/" rel="nofollow">were higher than ever in 2018</a> and yet produced the worst market results since 2008. This now-failing tactic of buybacks is the source of the “corporate debt bubble”. The stock market bubbles bursting is not that important to the everyday person, no matter how much media coverage will be devoted to it – the real economy will not not sink because of it, no matter how much less your 401k pension is now worth. <a href="https://www.forbes.com/sites/jessecolombo/2018/12/31/when-the-stock-buybacks-go-bye-bye/#40bd16dadedf" rel="nofollow">The related&lRead More – Source

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