Economy of Russia, how it is growing and falling. Explains the increasing inflation and declining growth due to oil crisis.

1. RUSSIAN ECONOMY
Presented by:
DILIP KUMAR (15BSP0388)
PALASH BHATIA (15BSP0798)
POORVI KALYANI (15BSP0837)
NIRALI SHARMA (15BSP0768)
DEEPAK KESARWANI (15BSP0357)
MOHSIN KHAN (15BSP0700)

2.  Substantial Oil and Gas wealth
 7th in GDP (nominal), 6th in GDP(PPP)
 Strong International reserves position
 Rich in natural resources
 Oil & Gas- 16 % of GDP, 52 % OF Federal budget, 70% of total exports
 Large sophisticated military industry
 Ruled by Autocrats
 Entered 2014 with declining growth
 External shock in 2014 leading to dual shock
Introduction

3. AGGREGATE DEMAND
Aggregate
Demand
Consumption
(C)
Investment (I)
Government
Expenditure
(G)
Trade Balance
(X-M)
Y=C+I+G+X-M

4. 1.Consumption
5.5
6.8
7.8
5
1.3
-0.8
-2
-1
0
1
2
3
4
5
6
7
8
9
2010 2011 2012 2013 2014 2015
ANNUALVARIATION%
YEAR
Consumption (Annual Variation in %)
• Low disposable income
• Low wages
• Increasing unemployment rate

5. 2.Investment
On 22 August 2012 Russia joined the WTO.
• it will bring down the level of Russia's import
duties to a more reasonable level, thereby
improving market access for EU businesses,
including service providers
• it will facilitate investment through a more
predictable legislative framework.
• it will also have a gradual positive impact on
Russian business as it will improve investment
conditions and competition on the Russian market.

6. 3.Taxes
• Corporate Tax rate - 20 %
• Personal Income Tax rate - 13%
• Sales Tax Rate - 18%
• Social Security Rate for Companies & Employees- 13%

7. 4.Interest
• Average rate- 6.93
• All time High- 17 (DEC
2014)
• Current rate- 11%
• Currently unchanged due
to consistent weak growth
rate.
• Decreased from 12.06 to
11.84 October 2015
• Average rate 23.19

8. 5.Trade
Trade Balance
• SEP 2015 – $ 8866 Million
• 1997-2015 Avg. – $ 9139.7 Million

9. PetroleumChemicals
Natural
Gas
Wood &
Wood
products
Metals
Military
equipment

10. 6. Government Spending

11. Fiscal Countermeasures
 Recapitalization of unstable banking system
 Ban on Imports of food from western countries
 Infrastructure Projects

12. Aggregate Supply
Factors affecting AS
 Price
 Cost of production
 Technological Developments

13. Wage Policy
• Wage growth declining
• Affecting Consumption
• Adverse shifts in distribution of primary income – shifts supply curve to left.
• Attractiveness of investing in Russia decreases.

14. Foreign Direct Investment
 Increased to 2640 Million USD in the second quarter of
2015 from 1704 Million USD in the first quarter of 2015
 Foreign Direct Investment in Russia averaged 5979.45
Million USD from 1994 until 2015
 Crucial- most of the technologies comes from outside.

15. Industrial Production
 Decreased 3.70 % yoy in September of
2015, following 4.3 % drop in the
previous month

16. Technology
 Tax policy in the Russian Federation for 2011 and the planning period of 2012
and 2013 promote innovation and support innovative activities
 Tax exemption for inventions and industrial designs and support for the
registration of patents and utility models
 Considerable tax incentives have been offered for the Skolkovo innovation
center

17. GDP

18. Inflation