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2012/SFOM10/008
Session: 2
Russian Economy in 2011 and in January-May 2012
Purpose: Information
Submitted by: Russia
10th Senior Finance Officials’ Meeting
St. Petersburg, Russia
28-29 June 2012
Russian Economy in 2011 and in January-May 2012
In 2011 and in January-May 2012, Russia registered production growth in the key types of economic
activity and a fall in the unemployment rate. Retail trade turnover, commodity exports and imports and
foreign trade surplus increased. Russia's balance of payments remained favourable. Inflation slowed.
At the end of 2011, the Bank of Russia eased its monetary policy to expand lending and keep
economic growth stable.
In 2011, Russia registered year-on-year growth in the following areas:
- GDP grew by 4.3%;
- industrial output expanded by 4.7%;
- fixed capital investment grew by 6.2%;
- agricultural output increased by 22.1%;
- retail trade turnover rose by 7.2%;
- exports of goods grew by 31.8% (to $522.0 billion);
- imports of goods increased by 32.0% (to $323.8 billion);
- foreign trade surplus widened by 30.0% (from $151.7 billion to $198.2 billion).
According to Rosstat estimates, in January-May 2012, Russia registered year-on-year growth in the
following areas:
- GDP grew by 4.0-4.5%;
- industrial output expanded by 3.0-3.2%;
- fixed capital investment grew by 12%;
- agricultural output increased by 4.3-4.4%;
- retail trade turnover rose by 7.1-7.3%;
- exports of goods grew by 11.0% (to $224-225 billion);
- imports of goods increased by 8.0% (to $129-130 billion);
Foreign trade surplus in the period under review stood at about $94 billion as against $82.4 billion in
January-May 2011.
The price situation in world commodity markets remained favourable for Russian exporters in
2011 as a whole. In particular, the price of Russia's Urals crude was on average 40.1% higher than in
2010 and equalled $109.6 per barrel. In April 2012, it grew to $118 per barrel, but fell in May to $109.2
per barrel.
Inflation. Consumer prices, which grew by 8.8% in 2010, continued to rise at the beginning of 2011,
but their growth slowed in the second half of the year. As a result, in December 2011, the inflation rate
(on an annualised basis) fell to 6.1%. In January-May 2012, inflation continued to slow down and the
annual rate of growth in consumer prices stood at 3.6%.
The reduced growth in money supply remained a major factor of the slowing of inflation: in 2010, M2
increased by 31%, in 2011, by 23%, and from April 2011 to April 2012, by 21%.
The Bank of Russia tightened its monetary policy at the beginning of 2011 amid rising inflation.
The monetary regulator took decisions to raise the refinancing rate and rates on other Bank of Russia
operations. As a result, from 3 May 2011, the refinancing rate was raised from 8.0% to 8.25% and on
26 December it was reduced back to 8.0% (taking into account the assessment of inflation risks and
risks for sustainable economic growth, particularly risks posed by the persisting uncertainty over
external economic developments) and is kept at this level to date.
The nominal exchange rate of the rouble against the US dollar fell by 1.9% and against the euro by
1.7% on average in December 2011 as compared with December 2010. In May 2012 as compared
with the previous month, the rouble also fell against the US dollar by 3.8% and against the euro by
1.4% on average, but as compared with December 2011, it rose against the US dollar by 2.6% and
against the euro by 5.3%.
In real terms, the rouble gained 1.0% against the US dollar and 1.9% against the euro in December
2011 as compared with December 2010. In May 2012 as compared with the previous month, the
rouble depreciated against the US dollar by 3.6% and against the euro by 1.3%, but as compared with
December 2011, it appreciated against the US dollar by 2.7% and against the euro by 5.7%.
The real effective exchange rate of the rouble rose by 3.9% in December 2011 as compared with
December 2010. In May 2012 as compared with the previous month, it fell by 2.0%, but as compared
with December 2011, it rose by 3.7%.
While pursuing its exchange rate policy in 2011, the Bank of Russia continued switching gradually to
the rouble’s free floating exchange rate regime. It broadened the limits of the floating band of the
rouble value of the bi-currency basket making this band more mobile.
From 27 December 2011, the Bank of Russia made the following changes to the parameters of its
exchange rate-setting mechanism:
it widened the operating range of permissible fluctuations in the rouble value of the bicurrency basket used to mitigate excessive exchange rate volatility, symmetrically from 5
roubles to 6 roubles;
it decreased the amount of cumulative interventions, necessary for the band shift by 5
kopecks, from $600 million to $500 million.
The Bank of Russia made these changes as part of its gradual transition to inflation targeting, which is
considered as the Bank of Russia's medium-term priority task in compliance with the Guidelines for
the Single State Monetary Policy in 2011 and for 2012-2013.
In 2011, Russia's international reserves increased by $19.3 billion to $498.65 billion as of 1 January
2012. In January-the beginning of May 2012, they were observed to grow (as of 1 May 2012, they
reached $524.4 billion), but then they began to go down and as of 1 June 2012 stood at $510.43
billion.
As the world prices for oil and other Russian export commodities grew significantly in 2011, the
current account surplus of Russia's balance of payments rose to $98.8 billion as against $71.1 billion
in 2010. In the first quarter of 2012, it stood at $42.3 billion.
Net private capital outflow increased in 2011, according to updated estimates, to $80.5 billion
($38.3 billion in 2010), of which $48.5 billion left Russia in the last four months of the year. In the first
quarter of 2012, net private capital outflow continued and at the end of March reached $35.1 billion.
Russia posted a federal budget surplus of 1.0% of GDP in 2011. From January through April 2012
(according to preliminary data of the Ministry of Finance), Russia registered a budget deficit of 0.4% of
GDP. Russia's government debt equalled 10.4% of GDP* in 2011, while Russia's external debt did not
exceed 2.5% of GDP.
June 2012
1
1
By comparison: the eurozone’s government debt exceeds 80.0% of GDP.