But while its true that Russias weakness hasnt been confined to a particular sector or industry, I think that the stagnation in industrial production is by far the most alarming. This is because, although its vulnerability to swings in energy prices is sometimes exaggerated, Russias economy really does benefit quite significantly from increases in the world price of oil. Oil prices have been at historically high levels , and Russias GDP has been correspondingly boosted. For all its many faults, the Kremlin is actually pretty good at getting petro rubles to trickle down to the population, and oil has helped keep wages and consumption robust. But industrial production is not dependent on world demand for energy, and is not automatically boosted by growth in other countries. It is also much more difficult for the state to simply increase by fiat. While the government can boost government wages or increase pensions (as it has done repeatedly over the past several years), its just a lot more difficult for it to increase the total output of the industrial sector. Worryingly, via the always useful FRED , the total production of Russian industry has been essentially flat since the beginning of 2012. Does this mean that the whole house of cards is going to collapse? No. Virtually all of Eastern Europe is going through a period of severe economic weakness. Poland, everyones favorite post-communist wunderkind, grew by 1.9% in 2012 and is forecast to grow by as little as 1.1% in 2013. Slovakia, which was also lauded for its determined economic reforms and its export-led growth model, had a similarly poor performance. It grew by 1.8% in 2012 and is forecast to grow by about 1% in 2013. So, even in its currently weakened state, Russias economy is actually performing better than those of many other countries in the region.
However, Capello has warned his men that the slightest underestimation of their opponents could cost them an automatic pass to the finals. Russia on Friday thrashed Luxembourg 4-0 but Azerbaijan, coached by German Berti Vogts and playing in front of fervent support at home in Baku, will be a different prospect. “After the match with Luxembourg, Capello reminded us that we still hadn’t clinched a place in the finals,” midfielder Dmitry Kombarov said. “He said that we need to keep ourselves focused just a little bit more. And we’re ready to fight for the win in Baku.” Vogts won the World Cup as a player in 1974 and the European championship as manager of Germany in 1996. And according to local press reports Azerbaijan’s football federation have promised record $127,000 bonuses for every team player if they beat Russia. Russia will be without left winger Yury Zhirkov, who suffered a hip injury on Friday. But Zenit St Petersburg midfielder Roman Shirokov , who captained Russia against Luxembourg, said all of his teammates understood the importance of the upcoming match. “Azerbaijan are unbeaten at home in this campaign. They’re skilled opponents and are seriously motivated,” he said. “But we are set to get a win there. We will play not for the bonuses but for our country.” Capello, who took over the Russia squad in July 2012, has managed to record an impressive four-match winning streak in the 2014 World Cup campaign, beating 2-0 Northern Ireland, 4-0 Israel, 1-0 Portugal and 1-0 Azerbaijan for a perfect record from the start.
Russia Holds Rates as Nabiullina Looks Past Slowing Economy
7, with the economy showing signs of continued weakness. While removing guidance from its statement that rates were at an appropriate level for the nearest future, the central bank said it was waiting for clearer signs that inflation expectations were falling enough to meet medium-term targets. The central bank isnt terribly concerned about the weak pace of growth, Vladimir Kolychev, chief economist for Russia at VTB Capital in Moscow, said by phone. Before the central bank starts reducing rates, it needs to see a reduction in inflation expectations. The ruble remained little changed against the dollar following the announcement, trading at 32.2800 per U.S. currency as of 6:48 p.m. in Moscow. Russia s ruble bonds due in February 2027 fell, increasing the yield six basis points, or 0.06 percentage point, to 7.73 percent. Easing Ahead The three-month MosPrime rate, which the largest Moscow banks say they charge one another, may decline 17 basis points over the next three months, according to forward-rate agreements tracked by Bloomberg. Thats down from as much as 56 basis points on Aug. 8. Leaving the key rate unchanged, the central bank placed 500 billion rubles in three-month loans backed by non-marketable assets, the regulator said in a separate website statement. All the funds were placed at a cutoff rate of 5.76 percent while 25 banks submitted bids at yields ranging from the minimum rate of 5.75 percent to 6.65 percent. Demand reached 563 billion rubles. The central bank last month increased its inflation (RUCPIYOY) target for next year to 5 percent, plus or minus 1.5 percentage points, from 4.5 percent, after the government backtracked on a plan to halt all increases in regulated prices for utilities and monopolies such as OAO Russian Railways. Inflation Goals Still-elevated expectations for future inflation must come down, even as the pace of economic growth remains low, Nabiullina told lawmakers Oct.
Decisions on Arctic Sunrise crew members Cristian D’Alessandro of Italy and David John Haussmann of New Zealand were expected later on Monday. A court in the northern port city of Murmansk has already denied bail to two Britons and four Russians held for the Sept. 18 protest in which activists tried to scale the Prirazlomnaya oil rig and security forces later boarded the Greenpeace ship. The piracy charges, punishable by up to 15 years’ jail, appear aimed at sending a message that Moscow will not tolerate attempts to disrupt its development of the resource-rich Arctic. Other countries and firms seeking to exploit Arctic energy resources face similar concerns from environmentalists, who fear they will destroy a pristine eco-system. Willcox, 60, a veteran campaigner who was at the helm of the Greenpeace ship Rainbow Warrior when it was bombed and sunk by the French secret service in 1985, denied the charges against him in court. “I have been doing this for 40 years and never faced a charge like this,” the state-run Russian news agency RIA quoted him as saying. “If I could start everything over, I would stay in New York.” Greenpeace says the protest at the rig owned by state-controlled Russian energy company Gazprom was peaceful and calls the piracy charges absurd and unfounded. “He is a hero not a pirate,” Willcox’s wife, Maggie, said in a statement. “I appeal to the common sense and conscience of the Russian authorities to let my husband and the rest of the people from the Arctic Sunrise come home.” President Vladimir Putin has said the activists were not pirates but that they had violated international law. The head of the Kremlin’s human rights advisory body has said he would ask prosecutors to withdraw the piracy charges. Investigators have said more charges will be pressed against some protesters after drugs and other suspect items were found on the ship.