In the fourth quarter of 2010 the Russian economy grew by less than expected, despite the higher commodity prices and investment growth induced demand. In the fourth quarter, gross domestic product (GDP) of the country increased by 4.5% yoy compared with 3.1 percent in the previous quarter. Analysts’ expectations were for growth of 4.8 percent. Federation president Dimitri Medvedev wants to 5 years the growth of the Russian economy to reach 10%, so that Moscow – the largest exporter of energy resources – to align this indicator with China, Brazil and India. In the third quarter the Russian economy has lost momentum after the country experienced the worst drought in half a century. Analysts say the drought has slowed growth to 0.8 percent. “The recovery is still very hesitant, especially if you look at the growth of Russian economy a few years ago,” said Neil Shearing, an analyst at Capital Economics in London. “There is evidence that income growth is slowing in the country and this is reflected in poor sales. The recovery of Russia lags behind the rest of the group BRIC (Brazil, Russia, India and China). In the last quarter of last year the Chinese economy grew 10.3 percent, India with 8.2 percent and Brazil by 5%.

The Russian army will be equipped with 8 new submarines, 100 warships, 600 aircraft and 1000 helicopters totaling 650 billion dollars by 2020. Among the new equipment of the Russian Navy will include two new ship platforms for helicopters, except two who have already purchased from France. The submarines will be armed with ballistic missiles Bualva despite recent problems in testing a new missile. The analysts from the ambitious program makes sense only if it is accompanied by reform of the armed forces. A painful reform to optimize the Russian armed forces is underway. According to the Associated Press this year 200 thousand Russian officers will lose their jobs, 9 of every 10 units will be disbanding. Last week Russian Finance Minister Alexei Kudrin announced that defense spending will triple from 0.5 percent of gross domestic product (GDP) now to 1.5 percent of GDP next year. A significant part of the new funds will be allocated to modernize the Russian navy. Besides submarines will be ordered 35 corvettes and 15 frigates.
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The growth of industrial production in Russia for the period January to April reached 6.9% yoy, Russian media reported on data from the Rosstat (Russian Statistical Service). Only in April from a year earlier growth in industry was 10.4 percent. On the other hand, for April to March, a drop in industrial production by 3,4%. The growth of industrial production in Russia for the first quarter amounted to 5.8% yoy in March but the figure was 5.7 percent. Gross Domestic Product (GDP) of Russia for the first quarter rose 4.5 percent on an annual basis. Among the leaders in growth industries is now the extraction of natural gas for April from a year earlier marks an increase of 27.5%. Significantly increased annually and the production of meat, fabrics, bags, plastics, furniture and some others. But gold production, metallurgy, machinery, trolley, sunflower oil, fell sharply. The financial crisis in Russia was less felt than ever and the Russian government did not got strong restrictions in the public expenses as the other countries.
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The Russian economy out of recession and began to recover, Prime Minister of Russia Vladimir Putin during an extensive report today on the work of the government last year exported to the State Duma, Russian media reported. According to Putin recession ended the Russian economy and now also the conditions for progress are very good. According to the Russian prime minister that does not mean that the country has gone out of crisis but the recession has ended. Putin reasons that make those findings justify its latest data on the development of Russian economy. He stated that preliminary results for first quarter suggest optimism – the growth of industrial production reached 5.8 percent, while real incomes have risen by 7.4 percent. Russian Prime Minister added that it is very likely the official forecast of growth of gross domestic product for 2010 from 3.1% to be exceeded and it reaches about 4%. Putin noted that the key sectors of the real economy and financial system out of the global test and enter into good shape. Putin stressed in his speech that it is necessary to keep the trend from last year to decrease inflation, when it slowed to 8.8 percent (the lowest level of 18 years) for this year is on average 5-6 %.
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The Russian economy grew in the first quarter of this year for the first time since 2008 thanks to the recovery of this industry and services, and improving labor market. On an annual basis for the first quarter GDP grew by 0.5 per cent since the fourth quarter of last year declined by 2.6 percent, data show the indicator for the economy of VTB Capital – the investment bank unit VTB. Only in March the Russian economy grew by 1.1 per cent growth from 0.5 percent in February, the index shows. Increased demand for raw materials and larger consumer spending helped the country to escape from its worst recession since the collapse of the Soviet Union. According to official statistics in the fourth quarter the economy shrank by 3.8 percent annually after a decline of 7.7 per cent in the third. For the year reported a decrease in GDP by 7.9 per cent. According to data from the state rail operator transporting goods by rail, which is considered indicative of changes in industrial production jumped by 12.7 per cent yoy in the first quarter. In February retail sales increased by 1.3 per cent annually, while unemployment fell to 8.6 per cent from 9.2 per cent. Capital investment and unemployment are “weak links” in the restoration, said last month, Deputy Economy Minister Andrei eyelid. VTB Capital indicator calculated on the basis of surveys of business conditions in manufacturing and services sectors.
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Ukraine has paid to Russia for gas supplies in November after the government is converting their dollars in special drawing rights (SDRs) of IMF, it is clear from the release of Naftogaz Ukraine. Naftogaz paid in full its obligations to Russia, has told the Bloomberg spokesman for the Kiev-based company. But he did not specify the exact amount of the transferred amount. Gazprom spokesman confirmed the information, also without revealing the value of the transfer. On December 2, Finance Minister of Ukraine said that the government is converting SDR two weeks earlier and in time will pay 770 million for supplies of blue fuel. On November 12 he said his country wants to convert 800 million SDRs at 1.28 billion dollars. Ukraine relies on Russia for around 70% of its energy needs and ensure the transit of about 80% of the quantities exported Russian gas to Europe. Under the agreement with Gazprom to Naftogaz to pay for supplies to Ukraine at 7th day of the month following delivery. The country already uses SDR once payment with Russia.
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France is now officially part of the gas pipeline project South Stream. This became clear after French energy giant Electricite de France (EDF) signed a contract with Russian gas monopoly Gazprom to join consortium building the gas pipeline South Stream. News was delivered personally by Russian Prime Minister Vladimir Putin, who is visiting in France. We recall that speculation on the participation of France to be strengthened through direct September, and then wrote to the Russian press. At last unofficial information France will take 10% of the company managing the project. At this stage, Gazprom and Italy’s Eni, divided in equal participation in it. The pipeline aims to diversify supply routes of Russian gas to European Union, bypassing Ukraine. Power of the pipeline system will be 63 billion cubic meters. South Stream project envisages the construction of underwater pipe that will link the Bulgarian Black Sea with the Russian coasts. Pipeline from Bulgaria will be divided into two sections. The first would have notified the south of Greece and Italy, and others will continue to the northwest to Central Europe.
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