Russian Economy in 2017. Trends and Outlooks

Authors: Abramov A., Avraamova E., Aksenov I., Arlashkin I., Baeva M., Balandina G., Barbashova N., Barinova V., Belyov S., Belyakov S., Bobylev YU., Bozhechkova A., Burdyak A., Volovik N., Gataulina E., Grishina E., Dezhina I., Deryugin A., Deshko M., Eliseeva M., Zatsepin V., Zemcov S., Izryadnova O., Kazenin K., Kiyucevskaya A., Klyachko T., Knobel' A., Kuzyk M., Loginov D., Lyashok V., Maleva T., Mal'ginov G., Mamedov A., Mau V., Mkrtchyan N., Polezhaeva N., Polyakova A., Radygin A., Semionova E., Simachev YU., Sokolov I., Sternik S., Tishchenko T., Tokareva G., Trunin P., Uzun V., Florinskaya YU., Khromov M., Careva YU., Cuhlo S., Cymbal V., Chernova M., Shagajda N., Shadrin A., YAnbyh R.

Journal: Russian Economy: Trends and Perspectives

Publication date: 31.05.2018

Abstract:

The review “Russian economy in 2017. Trends and outlooks” has been published by the Gaidar Institute since 1991. This is the 39th issue. This publication provides a detailed analysis of main trends in Russian economy, global trends in social and economic development. The paper contains 6 big sections that highlight different aspects of Russia's economic development, which allow to monitor all angles of ongoing events over a prolonged period: the socio-political issues and challenges; the monetary and budget spheres; financial markets and institutions; the real sector; social services; institutional changes. The paper employs a huge mass of statistical data that forms the basis of original computation and numerous charts confirming the conclusions.

Contents:

Section 1. At the end of a global crisis: economic problems of 2017–2019   15
1.1. Global trends and challenges   15
1.2. Russia’s socioeconomic policy   24
1.3. Conclusions regarding further development   32

Section 2. Monetary and fiscal policy 35
2.1. Monetary policy 35
2.1.1. Monetary policy trends  35
2.1.2. Money market  37
2.1.3. Inflationary developments  44
2.1.4. Balance of payments and ruble exchange rate 47
2.2. Fiscal policy 53
2.2.1. The characteristic features of budgets across the RF budgetary system   53
2.2.2. The characteristics of the federal budget  62
2.2.3. Interbudgetary relations and subnational finance  68

Section 3. Financial markets and financial institutions  77
3.1. The stock market recovery  77
3.2. The stock market   84
3.3. The market for non-government bonds  102
3.4. The market for government bonds  117
3.5. The derivatives market  123
3.6. Financial intermediaries and exchange infrastructure  126
3.7. Investors in the domestic stock market 129
3.8. Risk factors in the Russian financial market  137
3.9. Municipal and sub-federal debt market  141
3.9.1. Market development dynamics  141
3.9.2. Debt structure  145
3.9.3. Domestic bond issues  146
3.10. Russia's banking sector   150
3.10.1. Banking sector’s main development trends  150
3.10.2. Update of regulation procedure for bank resolution mechanism  151
3.10.3. Banking sector financial result  153
3.10.4. Interaction between banks and households  155
3.10.5. Bank lending as the main source of financing Russian economy  157

Section 4. The real sector of the economy  161
4.1. The macrostructure of production  161
4.1.1. The dynamics of the Russian economy in 2017: internal and external demand  161
4.1.2. The expenditure components of GDP in 2014–2017: consumer and investment demand  167
4.1.3. Changes in the GDP structure by income source 170
4.1.4. The dynamics and structure of production by type of economic activity  173
4.2. Russian industrial sector in 2017 (based on surveys findings)   175
4.2.1. Russian industrial sector in 2015–2017 – business assessment  176
4.2.2. Russian industrial sector in H1 2017   181
4.2.3. Russian industrial sector in H2 2017   183
4.2.4. Import substitution in Russian industry   186
4.3. The public sector of the Russian economy: it’s size and dynamics  191
4.3.1. The estimated inputs in the national economy of state-owned enterprises  192
4.3.2. Estimation of the input in GDP of state-owned enterprises  201
4.3.3. The public sector estimation   208
4.3.4. The aggregate estimation of the public sector in Russia's economy   213
4.4. Small and medium-sized enterprises in 2016–2017  219
4.4.1. The movement of the main development indicators in the SMB sector   220
4.4.2. Improvement of the measures designed to support small and medium-sized businesses in Russia  229
4.5. Fixed investment  235
4.5.1. Investment resources  235
4.5.2. Fixed investment financing by source and by type of ownership  238
4.5.3. Use of investment by arias of activity: reproductive structure 241
4.5.4. Investment financing by types of economic activity  243
4.6. The oil and gas sector   245
4.6.1. Dynamics of global oil and gas prices  245
4.6.2. Dynamics and production structure in oil and gas sector 247
4.6.3. Dynamics and structure of oil and gas exports   249
4.6.4. Dynamics of domestic prices on energy products  250
4.6.5. Prospects for development of the Russian oil industry   252
4.7. The year-end results of 2017 and new developments in Russia’s agrarian policy  254
4.7.1. The behavior of agricultural production  254
4.7.2. Government support of agriculture  257
4.7.3. Food security 264
4.7.4. Conclusions and recommendations  266
4.8. Foreign trade  268
4.8.1. World trade outlook  268
4.8.2. Terms of Russia’s foreign trade: market conditions for major products of Russian export and import 271
4.8.3. Main indices of Russian foreign trade 274
4.8.4. Regional pattern of Russian foreign trade   280
4.8.5. Russian foreign trade regulation 281
4.8.6. Integration processes   287
4.8.7. WTO Agreement on trade facilitation   288
4.9. Russia’s participation in the WTO trade dispute settlement system  289
4.9.1. 2017 updates on WTO trade disputes to which Russia is the complaining party   291
4.9.2. 2017 updates on WTO trade disputes to which Russia is the responding party  293
4.9.3. 2017 updates on WTO trade disputes to which Russia is a third party  298

Section 5. The social sphere 309
5.1. The situation of the household sector: households’ incomes, consumer’s market and labor market  309
5.1.1. Incomes and the rate of households’ poverty and inequality 309
5.1.2. Retail trade turnover and consumer price index  314
5.1.3. Consumer lending   317
5.2. Labor market  319
5.3. Households’ social well-being   322
5.3.1. Assessment of changes in the economic situation  323
5.3.2. Households’ adaptive behavior  325
5.3.3. Social expectations  327
5.4. Migration processes 329
5.4.1. The long-term migration   329
5.4.2. The temporary migration   332
5.5. The state of education in the Russian Federation in 2017   334
5.5.1. Pre-school education 335
5.5.2. Secondary (school) education  335
5.5.3. Extended learning activities for children   338
5.5.4. Secondary vocational education 339
5.5.5. Higher education  340
5.5.6. Supplementary vocational education  341
5.5.7. State-funded education   342
5.6. The housing market in Russia's cities in 2017   344
5.6.1. The behavior of housing market prices  345
5.6.2. The housing market in and around Russia's capital: the main factors determining the behavior of prices and market activity   349
5.6.3. The construction, commissioning, and market supply of new housing units 355
5.6.4. The forecast for Moscow's housing market for 2018 363

Section 6. Institutional changes 367
6.1. Federal property and privatization policy 367
6.1.1. Federally owned companies and organizations: quantitative changes 367
6.1.2. Privatization policy 374
6.1.3. Amendments to privatization laws and regulations . 378
6.1.4. Administration of public-sector entities . 387
6.1.5. Improving regulatory environment for federal property organizations 394
6.1.6. Fiscal effect of federal property policy 407
6.1.7. New version of the federally-funded program for federal property management: intermediate results and fulfillment prospects 414
6.2. Compliance with the Corporate Governance Code: are there any improvements? 430
6.2.1. The outspread of Corporate Governance Codes in the world 430
6.2.2. The novelties of the Russian Corporate Governance Code 431
6.2.3. The “comply or explain” approach 434
6.2.4. Compliance of companies’ practices with Corporate Governance Codes abroad 438
6.2.5. The analysis of companies’ compliance with the Corporate Governance Code in Russia 442
6.3. Science and innovations 454
6.3.1. National policy scientific and technological priorities 455
6.3.2. Science in higher education institutions: achievements and challenges 460
6.3.3. Academic science 468
6.3.4. Technological innovations promotion policy 472
6.4. Government promotion of scientific research and innovative activity at higher educational institutions: the main instruments of support, its scale and beneficiaries 477
6.4.1. Scientific research and innovative activity at universities: the current situation and development trends 477
6.4.2. The main instruments employed by the government in promoting the scientific research and innovative activity of higher educational institutions 484
6.4.3. The key directions, scope and specificities of current government policy aimed at promoting scientific research and innovative activities of higher educational institutions 504
6.5. The North Caucasus in 2017: major development trends 511
6.5.1. The federal program for development of the North Caucasian federal okrug: a shift in priorities? 511
6.5.2. Problems with accruals of debts for gas and power supply 513
6.5.3. Conflicts at the municipal level 514
6.6. Military economy and military reform in Russia 515
6.1.1. Military recruitment and social security policy
6.6.2. Military-technical policy 517
6.6.3. Military financial policy 519

References 527

Notes:

UDC 338.1(470+571)"2017"
BBC 65.9(2Рос)

R95 
Russian Economy in 2017. Trends and Outlooks. (Issue 39) – М.: Gaidar Institute Publishers, 2018. 544 pp.

Editorial Board: S. Sinelnikov-Mourylev (editor-in-chief), А. Radygin

ISBN 978-5-93255-530-9

Full version: files/text/trends/2017-eng/Book.pdf