Despite an extremely favorable combination of world price and the Rb. depreciation effect, in 2000 the investment climate has remained the same. The absence of structural transformations did not allo normalization of the interaction between the financial sphere and the real sector. The maintenance of high risks and unfavorable entrepreneurial and investment climate was determined by the unsteady legal area. The absence of legislative acts that guarantee protection of property rights, improvement of corporate governance, equalization of competition conditions, optimization of administrative regulation of markets, enhancement of transparency of economic operations became the factors that constrain investment activity of both the domestic and foreign capital.
Considering the above, in 2000 investment activity was developing under the impact of absolutely opposite trends. On the one and, a high investment growth rate and expansion of the domestic sources of financing were reported, while on the other, calculations showed that in 2000 th capital flight from the country practically has remained unchanged, which testifies to the unfavorable investment climate in the country.
The longer- term government strategy for the period between 2000-2010 is oriented to the emergence of investment model of economic development of the national economy which should preclude the effect of the noted negative factors.
The real sector: trends and factors
The results of 2000 showed positive dynamics practically across all the main macroeconomic parameters: the increment in GDP made up 7.6% vs. 1999, investment in capital assets- 17.7%, gross industrial output- 9.0%. The actual growth rates in the real sector have proved to be much higher than the projected ones underlying the 2000 budget. The activation of the domestic business generated by the Rb. depreciation allowed to hope, other conditions being equal, for the growth in GDP in 2000 within the range between 104 to 105%. However, in 2000 an additional impulse to the growth in the national economy was provided by the dynamic development of the world economy.
In 2000, the specifics of the economic of the Russian economy’s surge was the simultaneous growth of the domestic and foreign demand. On the one hand, almost a two-fold compression of imports compared with the pre-crisis period ensured the room for an intensive expansion of the domestic production and growth in incomes of producers of goods and services. On the other hand, given a favorable state of affairs to the Russian exporters, the growth in export revenues has had a substantial impact on the change of the structure and dynamics of final consumption. The value of the Russia export grew by 38.2% over the year, while the profit by the main sectors- 1.8 times. With the economy’s revenues growing, the share of gross savings raised up to 36.2% of GDP. That allowed ensuring a stable budget proficit and meeting the obligations on the timely funding of budget expenditure and servicing the public debt without any emergency borrowing in the domestic and foreign financial markets.
The growth in the economy’s revenues in the foreign trade area has had a substantial impact on the proportion of final consumption in GDP. It must be noted that in the conditions of the growth in production profitability rate along with the growth in export revenues, since 1999, for the first time ever during the last decade, the final consumption structure has demonstrated its trend to growth in the share of capital accumulation. With the level of business activity in the Russian economy growing, in 2000 the rise in investment demand provided for almost 1/4 of the increment in the physical volume of GDP.
Source: Goskomstat, RF Ministry for Economic Development
The economic growth of 1999-2000 back-upped by the activation of accumulation processes was taking place against the background of a moderate policy of changing expenditure on final consumption. In 1999 the population’s real income slid by 14.2% compared with the prior year and made up 72.2% of the level reported in 1997. In 2000, the favorable social background for the implementation of reforms has emerged. The current production growth potential resulted from an active investment activity, along with the growth of income of main kinds of businesses allowed solution of the accumulated social problems. One of the latter was paying off backwages and debts on pensions. As of January 1, 2001, the backwages emerged because of the underfinancing of the budgets of all tiers accounted for Rb. 4.9 bln. vs. 10.2 bln. reported as of the respective date of the prior year, while the outstanding debt resulted from the absence of enterprises’ own funds fell by 6.8 bln. over the year. In addition, in 2000 the government has succeed to pay off its pension debts.
With rather a regular trend to raising salaries and wages, and pensions in place, the population’s real income grew by 9.1% over the year. Given that in 1999 the population’s low income level was one of the factors constraining the growth rate in output of goods and services, in 2000 almost 2/5 of the increment in GDP was related to the growth in final consumption. However, even with such high growth rates, the economy has failed to overcome the decline in living standards determined by the 1998 crisis. Still, compared with 1997 which is recognized as one of the most successful years, the population’s real income makes up 93.6%. real salaries and wages- 95.6%, and real amount of pensions due- 77.6%. The maintenance of a low level of the population’s income is a factor that constrains the growth in the domestic demand.
Whilst evaluating the steadiness of the current state of the national economy, one should stress that the composition of external factors influencing production rise was different in 1999 and 2000. Given that in 1999 it was the Rb. depreciation that constituted the most significant factor for the growth in output and generated import- substitution processes, in 2000 that was the growth in international prices for energy sources and non-ferrous metals. The depreciation effect has exhausted by late-1999, while the impact of the other group of factors has weakened notably by late- 2000. As a result, the annual dynamics of macroeconomic indicators showed a gradual slowdown of economic growth. In the IYth quarter 2000, a negative monthly dynamics of the indicator of output of goods and services by main sectors of the economy was registered. By the end of 2000, the slowdown of dynamics of industrial output has manifested itself, along with a certain acceleration of inflation, whose rate increasingly accelerated over January and February 2001.
In 2000, the physical volume of import renewed its advanced growth rate compared with the dynamics of export and GDP. Given that the slowdown of the rate of physical volume of export by end-2000 could be attributed to the price situation in the world markets for minerals, the intensive growth in imports to Russia was related to purely domestic problems. The analysis of the development of the trade sector allows to argue that with a substantial depreciation of the national currency, Russia’s economy has failed to create new goods niches for the domestic products both in the foreign and domestic markets. The expansion of the domestic demand generated by the export-oriented sectors was supported primarily by the inertial development of the fairly narrow segment of sectors within the investment complex.
One of the reasons for a low competitiveness of the domestic produce was the fact that the economic growth of 1999-2000 mostly was oriented to the raising of the level of using and introduction into production of spare production capacities, while the absence of substantial shifts in terms of placement into operation of new production capacities ractically did not allow activation of import- susbtitution and conversion of export flows. Since early 2000 the structure of commodity resources of the consumer market and the market for material and technical produces has shown an intensification of the trend to growth in the proportion of imports. In addition, the latter was also encouraged by a real appreciation of the Rb. As a result, according to the RF Ministry for Economic Development, in 2000 net exports accounted for 98.9% of the level reported in the prior year. This is a very serious alarm bell for the Russian economy, for the contraction in net exports, as a rule, would lead to a slowdown in the economic growth rate.
The envisaged employment of favorable external factors cannot guarantee a maintenance of a steady growth rate, because to ensure that, one needs a substantial enhancement of the production efficiency and acceleration of structural reforms.
IET Monthly Trends Survey: February 2001
The dynamics of the surveyed indicators of the industrial sector testifies to enterprises’ attempts to renew the previous (noted prior to January this year) growth rates. However, the absolute decline in monetary sales noted for the second month running effectively blocks such attempts and makes the producers to expand their application of non-monetary sales schemes. The existing of uncertain estimates of finished produce in stock shows that enterprises lack a clear vision of prospects of the Russian industrial sector in the forthcoming future.
After the «January holidays» there has been noted no renewal of the growth in effective demand for industrial produce. The intensity of the contraction in sales declined slightly, i. e. on the whole across the industrial sector the decline in the volume of monetary sales continued. In February, the growth in sales was reported only by the chemicals, petrochemicals and machine building, while the other sectors showed decline of this index.
With their monetary sales declining, the enterprises have to revised their attitude towards non-monetary sales schemes. In February, the intensity of reduction in barter deals slid again. Since November 2000, when the highest barter reduction rate was registered, the index has grown by 11 points and became the worst (i. e. the most slow decline) over the last 11 months. In February it was only the ferrous metallurgy and forestry that reported an absolute growth in barter, while in other sectors the contraction in its volume continued, though with a slow intensity compared with January, except for chemicals and petrochemicals that reported a more rapid decline in barter transactions. It also was in February that for the first time ever for the whole period of monitoring the industrial sector reported the most significant slowdown in the fall of the use of promissory notes and off-sets in settlements in the industrial sector. As a result, the calculations also showed the further slowdown of the whole non-monetary demand (barter + promissory notes +off-sets) for industrial produce.
Despite the problems with sales, in February the enterprises practically fully restored their growth in output. Should there will be no renewal of effective demand in the forthcoming months or should the enterprises be not in a position to employ to a great extent (as it was noted between 1997 to 1998) non-monetary sales schemes, next decline of industrial output would be practically inevitable.
In February, the estimates of the stock of finished produce remained unchanged. For the second month running, the reports ‘above the norm’ are practically counter-balanced by the reports ‘below the norm’. During the prior period, over 27 months, the industry it has been visible that the industrial sector was experiencing a lack of the stock of finished products that arose immediately after the August 1998 crisis and was there until December 2000. The discontinuation of the growth in sales and output in January has forced the enterprises to revise their stock of produce in favor of its normalization. Considering the previous dynamics of this indicator, such a situation is a sigh of lowering optimism in the Russian industrial sector rather than a proof of a normalization of reproduction conditions.
The forecasts of change in effective demand generally have remained unchanged over February. The industrial sector still maintains one of the most optimistic hopes for the growth in monetary sales. An absolute contraction in monetary demand over the forthcoming months may become possible only in the non-ferrous metallurgy and the light industry.
Despite the remaining optimistic hopes for sales, under the pressure of actual changes in effective demand the enterprises have to have their forecasts of the change in their volumes of non-monetary transactions. The surveys in February registered expectations of the most moderate decline in barter over the last 16 months. As it was noted a month ago, so far it is only the ferrous metallurgy and the construction industry that envisage an absolute growth in barter, and the analogous situation arises in terms of transactions with the use of off-set schemes and promissory notes. The enterprises expect the volume of their operations to stabilize in the forthcoming future, while three months ago they forecasted their most intensive contraction. A net growth in such transactions may become possible in the construction sector, machine building, and the ferrous metallurgy. In general, in the meantime 27% of enterprises are prepared to react to the contraction in effective demand by raising their volume of non-monetary settlements.
In December 2000, Russia’s foreign trade turnover made up USD 14.7 bln., which was higher than the respective average monthly index reported in 2000 and at 7.6% higher than in December 1999.
When compared with the latter, the volume of exports grew by 3.1%, and their value reached USD 10 bln.
Source: Goskomstat of RF
It is the situation in the world market for energy sources that still has a crucial impact on the development of the national export.
Материалы этого сайта размещены для ознакомления, все права принадлежат их авторам.
Если Вы не согласны с тем, что Ваш материал размещён на этом сайте, пожалуйста, напишите нам, мы в течении 1-2 рабочих дней удалим его.