Economic News

New Budget for 2009

The Russian government has approved the latest draft of the revised 2009 budget, which proposes a 7.4% deficit (about $89 billion). That is the first deficit budget in the last 8 years. The budget spending includes $50 billion to finance a package of anti-crisis measures, including stimulating the domestic demand and support the financial sector. Russian banks will receive $9 billion to withstand the growing volumes of non-performing loans.

To cover the budget deficit, the authorities plan to use up to 55% of the Reserve Fund. As of March 1, 2009 Russia's Reserve Fund will be $385.3 billion, from a record $598.1 billion in August.

 

World Bank Sees Russian Economy To Contract by 4.5%

The World Bank predicts a 4.5% decline of Russian GDP for 2009, which is twice more than the 2.2% estimates by the Russian government. The bank's new forecast is based on global oil prices this year at $45 a barrel. According to the bank's estimates, Russia's net capital outflows in 2009 may exceed the record figures of 2008 and amount to $170 billion. These figures are much higher than those provided by the Russian Central Bank.

However, the organization thinks that despite a difficult economic situation, Russian's prudent fiscal policy and large reserve funds make it better prepared to deal with the impacts of the crisis than many other G-20 countries.

Russian Stock Market Picks Up

Russian stocks including Gazprom, Lukoil and Sberbank, will extend gains as oil, commodity prices and the ruble recover, according to the $110 million Hexam Global Emerging Markets fund. They believe that Russian stocks marked a low point in October 2008 and expects the market to recover now. Six months ago Hexam increased its investment in Russia from 8% to 18%.

 

Nasdaq to Open a Bourse in St-Petersburg

The first international stock exchange in Russia, run by the Nasdaq OMX, will open in St-Petersburg by the end of 2009. The partner for Nasdaq will be the St-Petersburg Stock Exchange (Russia's 3rd largest bourse). It will focus on small and medium-size companies' stocks.