April 19, 2011
The Russian Ministry of Economic Development has prepared its new macroeconomic forecast for 2011-2014, which will be used to develop the next federal budget.
The forecast is based on a $105 per barrel outlook for the Urals oil price in 2011. The ministry expects oil prices to fall to $93/b in 2012, but rise back to $97/b by 2014. Based on these oil prices, the government expects the economy to expand by 4.2% in 2011, and to stay below this level until 2014, when it is expected to accelerate slightly to 4.6%.
Domestic demand is set to be the major driver of economic growth. Thus the government expects investment to rise by 6.0% in 2011 and to accelerate to some 9.6% in 2014. Consumer demand is also set to support economic expansion as real disposable incomes and retail sales bottom out in 2011 with weak 1.5% and 3.8% growth respectively, but then should accelerate to 5% and 6% respectively by 2014. Apparently, the government expects domestic consumer demand to get a boost from the expected slowdown in inflation, which is expected stay below 7.5% in 2011, and to fall gradually to 5.0% by 2014.
Russia's trade surplus is expected to stay in a healthy surplus throughout the entire forecast period, even though it is expected to shrink from some $195bn in surplus in 2011 to $91.9bn by 2014. A persistent trade surplus should ensure general stability for the ruble, which is expected to fluctuate close to RUB28/USD1 all the way until 2014.
Overall, we view the new government forecast as cautiously realistic, even despite what we see as rather supportive oil price assumptions. The forecast is rather close to our outlook on most major parameters, even though we are a bit more conservative in our long-term assessment of economic growth; we expect 3.5% real GDP growth in 2014.
We believe that the major market impact of the forecast will be delivered through the new federal budget, which is to be based on it. We think that such moderate expectations of economic growth, despite the rather high oil price forecasts, might suggest that the government is likely to maintain its relative austerity mode in spending, which is being advocated by the Ministry of Finance. Thus we believe that the forecast suggests a lack of any major ambitions to accelerate economic growth in the near future, which, we think suggests that the government does not plan any drastic structural changes in budget spending or economic policy. We think this should minimize and potential market impact of the news.
We do not expect any major market impact from the news as the forecast is likely to suggest a lack of any major changes in budget policy over the next several years.
Business, Energy or Environmental regulations or discussions
Rosneft, Evraz, TMK, Novolipetsk Steel: Russian Equity Preview
By Marina Sysoyeva - Apr 18, 2011 10:00 PM GMT+0200
The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.
The 30-stock Micex Index dropped 3.7 percent to 1,714.07 in Moscow. The dollar-denominated RTS fell 4 percent to 1,950.15.
OAO Rosneft (ROSN RX): The state oil producer may swap shares with BP Plc and find a new partner for Arctic drilling if a court allows the U.K. explorer to split the two parts of their agreement, an independent director at BP’s Russian venture said. Rosneft dropped 3.5 percent to 238.75 rubles.
Evraz Group SA (EVR) : Russia’s second-largest steelmaker plans to invest 2.5 billion rubles ($88.2 million) over the next two years in its vanadium unit, OAO Kachkanarsky GOK, to increase its ore output 8.9 percent to 55 million metric tons, Interfax said. Evraz dropped 3.7 percent to $34.90 in London.
OAO TMK (TMKS LI): The Russian pipe producer is set to file its first-quarter production results today. TMK fell 1.4 percent to $19.13 in London.
OAO Novolipetsk Steel (NLMK RX): Russia’s third-largest steel producer by output is scheduled to publish its first- quarter production results today. The company fell 5.1 percent to 106.06 rubles in Moscow.
To contact the reporter on this story: Marina Sysoyeva in Moscow email@example.com
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* Metalloinvest currently holds 4 pct of Norislk Nickel
* Usmanov still sees formation of Russian global mining firm
* In talks with Mitsui over stake in iron mine, partnership
MOSCOW, April 19 (Reuters) - Metalloinvest plans to raise its stake in Norilsk Nickel (GMKN.MM) to 5 percent from 4 percent, majority owner Alisher Usmanov told Russia's Kommersant daily in an interview published on Tuesday.
"Our plan is to reach 5 percent," he was quoted as saying.
Usmanov also repeated earlier calls for Russia to form a global metals giant, with Norilsk Nickel serving as the first building block.
"Sooner or later, the question of consolidation Russia's metals and mining industry will arise," he said.
The Russian billionaire, who also owns Kommersant and part of London's Arsenal soccer team, mooted the plan prior to the 2008 downturn as a way to create a Russian rival to global mining giants such as BHP Billiton (BLT.L).
However, it fizzled out after liquidity dried up in 2008 and metals prices collapsed, forcing Russian miners to concentrate on keeping their own businesses running.
Usmanov also said Metalloinvest is still mulling a possible initial public offering to raise capital to pay down debt.
He added that Metalloinvest, which is Russia's largest iron miner, could also raise funds via a syndicated credit.
Metalloinvest's earnings before interest, taxation, depreciation and amortisation (EBITDA) are about 1.3-1.5 times above its debt.
Talks with Mitsui (8031.T) are still underway, and Usmanov said the Japanese firm will likely take a minority stake in Lebedinsky, one of Metalloinvest's two iron ore companies.
"They want a 15 percent stake," Usmanov said.
(Reporting by Alfred Kueppers; Editing by Erica Billingham)
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