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Wednesday, March 14, 2018

The devaluation has led to growth of several sectors

Western sanctions, falling oil prices and the ruble devaluation has had on Russia’s economy very ambivalent effects. GDP is definitely falling, and economic data is also not happy, however, several sectors of the Russian industry was in substantial benefit. The substitution, as it turned out, really works.

After a year since the devaluation of the ruble in the Russian economy experiencing a marked slowdown. According to Rosstat, from January to October, the production index of goods and services by main economic activities amounted to only 95.4% of the same indicator for the same period last year, while the index of industrial production was equal to 96.7 percent.

“During the year completed the process of adapting the currency market to the new prices, and the result of this process has generally been in favor of Russian producers”

However, in some industries the concept of “substitution” – the word, in the last year is not coming down from the mouths of officials and businessmen already can be considered a reality. Although for the 10 months of production of food products (including beverages and tobacco) showed a very modest growth of just 1.8%, the individual segments of the food industry grew at an accelerated pace. For example, the production of hard cheeses January-October grew by 39,5%, pork – by 13,8%, poultry meat – by 10.2%, frozen fish – by 10.3%, canned fish in tomato sauce – by 26.6%, without vinegar canned vegetables and mushrooms – 17%, etc.

Distillers got a sinecure

This growth is clearly visible to the ordinary buyer for some products, the Russians managed to almost completely displace imports from the shelves. During the “governmental hour” in the state Duma last week the Minister of agriculture Alexander Tkachev said that Russia fully provides itself with grain, potatoes, vegetable oil and sugar, and the level of self-sufficiency in poultry meat and pork has reached 90%. At the same time, problematic segments-milk and beef – self-sufficiency here at the moment is 81% and 75%, respectively, while in the segment of fruit and vegetable products of the Russian enterprises while turning a blind needs just a third.

Good effect from the devaluation has received such prestigious segment of the food industry, as wine making: won first of all by those producers who were able to offer wine by 300-400 rubles per bottle.

“Cheap imported wine, which constituted a significant portion of the range shelves of major retailers, it became unprofitable to import and wine trading companies have begun to urgently look for a replacement among the Russian manufacturers. As a result, volume production of some of the major players has grown in 2015 by 30-40%,” – said the newspaper VIEW Roman Neborsky, chief winemaker economy “Sauk-Dere” (Krasnodar region). However, he makes the caveat that if we take the same figures in terms of one of the world’s reserve currency, the sector still shows a decline of momentum.

The tourist industry has felt the positive effect a year ago. Immediately after the sharp decline of the ruble, many Russians, who were at ski resorts in Europe, on the move changed plans and went to Krasnaya Polyana, where the Olympics was built entirely new infrastructure. Already in mid-January, the Krasnodar authorities reported that the new year’s dates here were bought out all the seats, and the total number of tourists reached 167 thousand people. The tourist boom continued and summer resorts of the Big Sochi were loaded at 94%. High dynamics of growth in tourist arrivals showed and Crimea. According to the Ministry of resorts and tourism of the Republic from January to November here rested 4,418 million tourists, which is by 27.7% more than last year.

How are the plans for the replacement of imported goods rossiiskimi upcoming new year holidays in domestic resorts can be beaten record attendance. In October, the Association of tour operators of Russia noted that over the past two years the number of Russians booking new year’s tours abroad, fell five times from 150 to 30 thousand people, while the demand for domestic resorts for the New year increased by 12% in comparison with 2014.

And after the ban to have a rest in Egypt and Turkey’s interest in domestic tourism may increase, and this will benefit not only popular resorts, but also completely new direction. In particular, according to JSC “resorts of the North Caucasus” this year a new ski resort in Arkhyz (Karachay-Cherkessia) can visit about 150 thousand people – last season there rest 100 thousand.

Success in domestic chemical-pharmaceutical industry is much less noticeable, but it is the industry of today looks almost the most dynamic. The production index in January-October there amounted to 106,9% as compared to the same period last year. Especially are steadily growing production volumes in such segments of the chemical industry as organic dyes and colored varnishes (plus 18.2 percent), ethylene (plus 15.7 percent), plastics in primary forms (plus 9%), synthetic rubbers (plus 12.7 per cent), and in the pharmaceutical industry of the Russian production for the period increased by 11.9%.

As himichat importers

“The trend is indicated correctly, although there is a certain problem of correctness of statistical data”, – commented in an interview with the newspaper VIEW Vladimir Guryanov, Vice-President of group of companies “Arnest”, Russia’s leading manufacturer of aerosol products. According to him, statistics indicate two key groups of companies that receive the award in rubles due to devaluation. First, it is the producers of mineral fertilizers, which are actively exporting, we have earn in the external market. Secondly, manufacturers of home – growth, on the contrary, due to the expansion of domestic demand, in the lower and middle price segments, as significantly increased their foreign counterparts.

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Initially, the Ministry had hoped that in the domestic chemical industry at least will be not worse, and predicted only the 99.2–99.6 percent in comparison with last year’s production volume. However, autumn was given a new, much more joyful a forecast that by year-end, the index of chemical production may amount to 105.5% compared to 2014. Look confidently to the future and the largest players, particularly those serving foreign markets.

In addition, the devaluation did not stop the modernization of the domestic chemical enterprises and the creation of new industries. As reported in October in the international exhibition “Chemistry-2015” Director of the Department of chemical engineering and the forestry complex of the Ministry of industry and trade Vladimir Potapkin, by 2020, the industry plans to launch 200 projects with a total investment of more than 1 trillion rubles.

Metallurgists against scrap no reception

Other sectors, however, income from the devaluation of the ruble was not so stable. As an example, the steel industry, which was one of the first recorded in the devaluation a serious profit. So, at the end of the first quarter of Severstal’s revenues increased by 62% in comparison with last year, NLMK – on 85%, and Magnitogorsk iron and steel was able during this period to show profit instead of loss posted the year before.

But by the end of the year, the mood of steelmakers fell. “I’d be careful to talk about “sustainable growth” Russian metallurgy, – says the newspaper VIEW Deputy General Director of analytical Agency “Rusmet” Michael Rodionov. Yes, the devaluation was very much in the beginning, but now the effect is gradually exhausted because of the decrease in domestic demand and the gradual closing of foreign markets, due in part to sanctions and counter-sanctions, partly by growing competition with Chinese steel products and Ukrainian scrap, partly by the initiation of anti-dumping investigations”.

In the first 10 months, the index of metallurgical production was only of 95.6% compared with the same period last year, although on the background of the General decline in metallurgy can be divided into several segments, which are still actively growing. It is, above all, pig iron (plus 4.2 per cent), the production of flat galvanized steel (plus 12.8 percent) and steel pipes (plus 4.1 per cent).


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