1September 2013INVESTMENT RESEARCH Economics Russia in 2013: Growth Moderates Amid High Inflation...
-
Upload
georgina-watson -
Category
Documents
-
view
213 -
download
0
Transcript of 1September 2013INVESTMENT RESEARCH Economics Russia in 2013: Growth Moderates Amid High Inflation...
1September 2013 INVESTMENT RESEARCH
EconomicsRussia in 2013: Growth Moderates Amid High Inflation
Evgeny Gavrilenkov, Chief Economist
September 2013
INVESTMENT RESEARCH
2September 2013 INVESTMENT RESEARCH
Sluggish economic growth in 1H13, but there is a chance for a rebound in 2H13
Domestic demand weakened in 1H13, eroded by high inflation and high interest rates. Retail sales grew 5.9% and investments rose 6.7% in 2012. In 7m13, retail was up 3.8% and investment was reportedly down 0.7% y-o-y (in July alone, investment was up 2.5%). Both numbers should look better in 2H13 as inflation subsides and lending rates will slowly come down.
Economic growth decelerated largely because nominal private consumption, which in the past was fueled by rapidly expanding consumer lending, decelerated, as households are paying a rapidly growing proportion of their income on interest payments.
Apart from that, government interventions on money markets, which fueled devaluation expectations, had a negative impact on economic activity.
The CPI edged up 0.8% m-o-m in July. This compares with 1.2% a year earlier, bringing y-o-y inflation to 6.5% as of August 1, versus 6.9% at end June. Over the first 26 days of August, inflation was at 0.1%, versus 0.2% in the same period last year. Thus, y-o-y inflation slowed to 6.4%, from 6.5% at the beginning of the month. YTD inflation also slowed to 4.5%, versus 4.7% a year earlier. In our base case, y-o-y inflation will come down below 6% at end 2013.
We see GDP growing around 2.5% in 2013. Retail sales expanded 4.3% y-o-y in July and 3.8% in 7m13. Our forecast for annual consumption growth is around 4.0%, as we expect it to rebound in 2H13 as inflation decelerates. The investment statistics are biased: investment growth was too strong in 1Q12, which created a high-base effect. This effect will gradually evaporate by year end, and investment growth should accelerate in 2H13, bringing the annual figure to around 3.5%.
3September 2013 INVESTMENT RESEARCH
Industry stagnates amid decelerating domestic demand
Source: State Statistics Service, Sberbank Investment Research
90%
100%
110%
120%
130%
140%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Industrial output Seasonally adjusted
-10%
0%
10%
20%
30%
40%
50%
60%
-10%
-5%
0%
5%
10%
15%
20%
25%
Jan ’10 Jul ’10 Jan ’11 Jul ’11 Jan ’12 Jul ’12 Jan ’13 Jul ’13
Retail sales Manufacturing Imports (rhs)
Industrial output growth decelerating as generally expected, January 2006 = 100%
Retail, manufacturing and import growth, y-o-y
Source: State Statistics Service, Sberbank Investment Research
4September 2013 INVESTMENT RESEARCH
Basic sector dynamics (as well as GDP) have not been revised upward despite changes in wholesale trade
Source: State Statistics Service
-10%
-5%
0%
5%
10%
15%
Jan
’12
Feb
’12
Mar
’12
Apr
’12
May
’12
Jun
’12
Jul ’
12
Aug
’12
Sep
’12
Oct
’12
Nov
’12
Dec
’12
Jan
’13
Feb
’13
Mar
’13
Apr
’13
May
’13
Jun
’13
Jul ’
13
Wholesale trade, new Wholesale trade, old Basic sector growth
5September 2013 INVESTMENT RESEARCH
The wealthier the country, the slower the growth expected
Source: IMF
0
5,000
10,000
15,000
20,000
25,000
-5% 0% 5% 10% 15%
GD
P pe
r cap
ita, $
GDP growth, y-o-y
Russia Panama
Turkmenistan
Portugal
Czech Republic
Iran
EstoniaChile
Brazil
6September 2013 INVESTMENT RESEARCH
Russia’s indebtedness is low compared with peers
GDP per capita and gross public debt in East European countries and the FSU, 2012
GDP per capita and external debt in East European countries and the FSU, 2012
Source: State Statistics Service, Sberbank Investment Research Source: State Statistics Service, Sberbank Investment Research
Armenia
Azerbaijan
Kazakhstan
KyrgyzstanTajikistan
Turkmenistan
Uzbekistan
BelarusBulgaria
Croatia
Georgia
Hungary
LatviaLithuania
Macedonia
Moldova
Montenegro
Poland
Romania
Russia
SerbiaUkraine
SlovakiaCzech Republic
Slovenia
Estonia
0
5,000
10,000
15,000
20,000
25,000
0% 20% 40% 60% 80% 100%
GD
P pe
r cap
ita, $
Public debt, % of GDP
Armenia
Azerbaijan
Kazakhstan
KyrgyzstanTajikistan
Turkmenistan
Uzbekistan
Belarus Bulgaria
Croatia
Georgia
HungaryLatviaLithuania
Macedonia
Moldova
Montenegro
Poland
Romania
Russia
Serbia
Ukraine
SlovakiaCzech Republic
Slovenia
Estonia
0
5,000
10,000
15,000
20,000
25,000
0% 50% 100% 150% 200%G
DP
per c
apita
, $
External debt, % of GDP
7September 2013 INVESTMENT RESEARCH
The massive liquidity absorption by the Finance Ministry destabilized money markets in mid 2012, R bln
Note: Injection of liquidity (+), absorption of liquidity (–)Source: Finance Ministry, Central Bank, Sberbank Investment Research
-1,000
-800
-600
-400
-200
0
200
400
600
800
Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13
Budget balance (inversed) Deposits of Finance Ministry Net domestic borrowing
Q1 Neutral Policy Q2 Harmful sterilization
Q3 and Q4 Temporary relief
1H13liquidity injection
8September 2013 INVESTMENT RESEARCH
Credit rates grew in 2012 amid increased and domestic Sovereign borrowing, but both stabilized in 2013
Source: Central Bank, Finance Ministry
2,000
2,500
3,000
3,500
4,000
4,500
5,000
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
10.5%
Jan
’11
Mar
’11
May
’11
Jul ’
11
Sep
’11
Nov
’11
Jan
’12
Mar
’12
May
’12
Jul ’
12
Sep
’12
Nov
’12
Jan
’13
Mar
’13
May
’13
Jul ’
13
Domestic Sovereign debt (rhs), R blnCredit rate, excluding SberbankCredit rate, total
9September 2013 INVESTMENT RESEARCH
Nominal interest rates: the margin between banks’ lending rates and their borrowing costs have narrowed
Source: Central Bank
0%
5%
10%
15%
20%
25%
2003 2005 2007 2009 2011 2013
1d MIACR Deposit rate Credit rate Refinancing rate
10September 2013 INVESTMENT RESEARCH
Real interest rates turned positive in 2012, but some moved back to negative territory as inflation accelerated
Source: Central Bank
-15%
-10%
-5%
0%
5%
10%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
1d MIACR Deposit rate Credit rate Refinancing rate
11September 2013 INVESTMENT RESEARCH
Although external debt has grown, foreign debt payments are bearable, $ bln
Source: Central Bank
0
100
200
300
400
500
600
700
800
1Q
08
2Q
08
3Q
08
4Q
08
1Q
09
2Q
09
3Q
09
4Q
09
1Q
10
2Q
10
3Q
10
4Q
10
1Q
11
2Q
11
3Q
11
4Q
11
1Q
12
2Q
12
3Q
12
4Q
12
1Q
13
2Q
13
Public debt Bank debt Non-bank debt
Total debt asof Jul 1, ’13
Demanddebt
3Q13 4Q13 1Q14 2Q14 3Q14 Over2
years
Schedule
undet
Noschedul
eTotal 703.9 36.7 20.6 20.9 14.5 15.0 16.5 318.0 24.0 16.6Public debt 75.1 3.1 2.1 0.3 1.2 0.3 0.8 37.0 0.5 9.0Bank debt 210.7 19.7 9.6 6.4 2.9 7.0 6.5 76.7 20.4 –Non-bank debt 493.2 13.8 10.2 14.2 10.4 7.7 9.2 204.3 3.1 7.6
12September 2013 INVESTMENT RESEARCH
The Central Bank and the Finance ministry intervene on the money markets jointly but without much coordination
Source: Finance Ministry, Central Bank Source: Central Bank
The Finance Ministry has become an important player on the money market, R bln
Since 2009, the forex market is more volatilethan the ruble money market as monetarypolicy has changed
-300
0
300
600
900
1,200
1,500
Jan ’11 Apr ’11 Jul ’11 Oct ’11 Jan ’12 Apr ’12 Jul ’12 Oct ’12 Jan ’13 Apr ’13 Jul ’13
Total actual Total scheduled Budget balance
0%
5%
10%
15%
20%
25%
30%
29
31
33
35
37
39
41
Jan ’07 Jan ’08 Jan ’09 Jan ’10 Jan ’11 Jan ’12 Jan ’13
RUB/ EUR-USD 1d MIACR (rhs)
Volatility high on the money market, low on the forex market.
Volatility high on the forex market, low on the money market.
13September 2013 INVESTMENT RESEARCH
The Central Bank has again increased long-term lending to banks against illiquid collateral in July 2013
Source: Finance Ministry, Central Bank
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13
Central Bank credit to banks via repo, R mln
Central Bank credit to banks excl. repo, R mln
Finance Ministry deposits, R bln
1d MIACR (rhs)
14September 2013 INVESTMENT RESEARCH
Oil price and domestic inflation are key determinants of the exchange rate moves in the long run
Source: Central Bank, Bloomberg, Sberbank Investment Research
20
22
24
26
28
30
32
34
40 50 60 70 80 90 100 110 120 130
RU
B/U
SD
Urals, $/ bbl
Jan 1, 2010-Oct 31, 2010y=-0.0933x+37.398
Nov 1, 2010-Aug 31, 2011y=-0.0974x+39.222
Oct 1, 2011-Sep 02, 2013y=-0.1172x+44.006
Jan 2003-Dec 2008y=-0.0792x+31.976
15September 2013 INVESTMENT RESEARCH
New equilibrium has yet to emerge
Source: Central Bank, Sberbank Investment Research, Bloomberg
27
28
29
30
31
32
33
34
60 70 80 90 100 110 120 130
RU
B/U
SD
Urals, $/ bbl
Jan 1, 2010-Oct 31, 2010
Nov 1, 2010-Aug 31, 2011
Oct 1, 2011-Apr 30, 2013
May 1, 2013-Sep 02, 2013
new equilibrium to emerge
16September 2013 INVESTMENT RESEARCH
Flat currency band looks unreasonable amid high inflation
Source: Central Bank
27
30
33
36
39
42
Jan ’08 Jul ’08 Jan ’09 Jul ’09 Jan ’10 Jul ’10 Jan ’11 Jul ’11 Jan ’12 Jul ’12 Jan ’13 Jul ’13
Floating boundaries of bi-currency exchange rate RUB/ USD-EUR Bi-currency average rate
17September 2013 INVESTMENT RESEARCH
Internal regulations force the Central Bank to support the ruble if it moves away from the median of the band
Source: Central Bank, Sberbank Investment Research
-600
-300
0
300
600
-8%
-4%
0%
4%
8%
Jan ’12 Apr ’12 Jul ’12 Oct ’12 Jan ’13 Apr ’13 Jul ’13 Oct ’13
Central Bank interventions (minus=selling, plus=buying) (rhs) Deviation from bi-currency average rate
18September 2013 INVESTMENT RESEARCH
Central Bank refinancing banks and absorbing liquidity at the same time by buying forex
Source: Central Bank, Sberbank Investment Research
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
Jan ’13 Feb ’13 Mar ’13 Apr ’13 May ’13 Jun ’13 Jul ’13 Aug ’13 Sep ’13
Central Bank credit to banks via repo, R mlnCentral Bank credit to banks excluding repo, R mlnAccumulated Central Bank interventions, R bln (minus=selling)1d MIACR (rhs)
19September 2013 INVESTMENT RESEARCH
Real and nominal dynamics of major GDP components are different
Source: State Statistics Service, Sberbank Investment Research
Public consumption as % of GDP Public consumption and investments as % of GDP
Source: State Statistics Service, Sberbank Investment Research
14%
16%
18%
20%
22%
24%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Nominal prices 2008 prices
14%
16%
18%
20%
22%
24%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Public consumption Fixed capital investments
20September 2013 INVESTMENT RESEARCH
Private consumption and net exports as % of GDP
Source: State Statistics Service, Sberbank Investment Research
0%
10%
20%
30%
40%
50%
60%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Private consumption Net exports
21September 2013 INVESTMENT RESEARCH
Inflation accelerated in 2H12 amid moderate money supply growth, but should decelerate in 2H13
Source: State Statistics Service, Central Bank
0%
2%
4%
6%
8%
10%
12%
14%
16%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
M2 y-o-y Inflation (rhs) y-o-y
22September 2013 INVESTMENT RESEARCH
Annual inflation gradually returns to a more “normal” level as last year’s base effect evaporates
Source: State Statistics Service, Central Bank Source: State Statistics Service, Central Bank
Annual inflation versus refinancing rate Monthly inflation, m-o-m
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2011 m-o-m 2012 m-o-m 2013 m-o-m
2%
4%
6%
8%
10%
12%
14%
16%
Jan ’09 Jul ’09 Jan ’10 Jul ’10 Jan ’11 Jul ’11 Jan ’12 Jul ’12 Jan ’13 Jul ’13
CPI, y-o-y Refinancing rate
23September 2013 INVESTMENT RESEARCH
Utility tariff indexation has a limited impact on CPI, January 2009=100%
Source: State Statistics Service
100%
110%
120%
130%
140%
150%
160%
Jan '09 Jul '09 Jan '10 Jul '10 Jan '11 Jul '11 Jan '12 Jul '12 Jan '13 Jul '13
CPI Food Non-food Housing
24September 2013 INVESTMENT RESEARCH
Consumer lending grew too fast in 2011-12
Source: State Statistics Service, Central Bank
Consumer credits still grow too fastConsumer lending expanded more than 40% in 2011 and early 2012, which also contributed to an acceleration in inflation, y-o-y
Data: January 2009-May 2013Source: State Statistics Service, Central Bank
-2%
-1%
0%
1%
2%
3%
4%
5%
3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0
Loan
gro
wth
, m-o
-mConsumer lending, R trln
10%
15%
20%
25%
30%
35%
40%
45%
50%
Jan ’11 Jul ’11 Jan ’12 Jul ’12 Jan ’13 Jul ’13
Corporate loans Retail loans Total loans
25September 2013 INVESTMENT RESEARCH
Bank credit/GDP ratios remain low and are set to rise, albeit moderately
Source: Central Bank, State Statistics Service
0%
10%
20%
30%
40%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Consumer crediting, % of GDP Enterpise crediting, % of GDP
26September 2013 INVESTMENT RESEARCH
Nominal consumption growth decelerates despite stable and even accelerating growth of nominal income…
Source: State Statistics Service, Central Bank
Consumer credits and deposits, y-o-yNominal income and retail sales, y-o-y
0%
3%
6%
9%
12%
15%
18%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Nominal wages Nominal pensionsPaid services to the population Nominal retail sales
Source: State Statistics Service, Central Bank
0%
10%
20%
30%
40%
50%
Jan ’11 Jul ’11 Jan ’12 Jul ’12 Jan ’13 Jul ’13
Consumer credits Consumer deposits
27September 2013 INVESTMENT RESEARCH
… as interest rate on consumer loans are too high
Source: State Statistics Service
Totalincome
Income frombusiness activities
Wages, includinghidden wages
Socialpayments
Propertyincome
Otherincome
1Q12 100% 9.1% 66.0% 18.8% 4.2% 1.9%2Q12 100% 8.2% 64.9% 19.5% 5.4% 2.0%3Q12 100% 8.8% 65.0% 18.5% 5.7% 2.0%4Q12 100% 8.0% 68.5% 16.5% 5.0% 2.0%2012 100% 8.5% 66.2% 18.2% 5.1% 2.0%1Q13 100% 8.5% 66.2% 18.7% 4.7% 1.9%2Q13 100% 8.2% 65.9% 18.7% 5.2% 2.0%
<30d 31-90d 91-180d 181d-1y <1y >1y
Jan ’11 14.0% 19.5% 31.8% 30.4% 27.2% 17.5%Jul ’11 12.6% 15.5% 27.3% 25.9% 22.7% 17.3%Jan ’12 13.7% 15.7% 31.9% 27.6% 25.4% 17.7%Jul ’12 13.3% 16.3% 27.6% 26.1% 24.7% 19.0%Jan ’13 15.4% 16.8% 27.9% 25.1% 24.0% 20.8%May ’13 19.8% 16.1% 28.4% 26.5% 25.2% 20.1%
Individual loans, maturity
Nominal interest rates on retail loans
Household income structure
28September 2013 INVESTMENT RESEARCH
Interest paid on retail loans/income ratio started to grow exponentially
0%
1%
2%
3%
4%
2007 2008 2009 2010 2011 2012 1Q13
Source: Central Bank, State Statistics Service, Sberbank Investment Research
29September 2013 INVESTMENT RESEARCH
Population by age group, ’000 people, scenarios forecast
Source: State Statistics Service
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2002
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
0-19 20-39 40-59 >60
30September 2013 INVESTMENT RESEARCH
Consumption supported by consumer lending was a key driver of economic growth
Source: State Statistics Service, Central Bank
Private consumption was a key driver of economic growth, but its share in nominal GDP did not increase
Consumer credit supported consumption
Source: State Statistics Service, Central Bank
-20%
0%
20%
40%
60%
80%
100%
120%
-10%
-5%
0%
5%
10%
15%
20%
25%
1Q
02
3Q
02
1Q
03
3Q
03
1Q
04
3Q
04
1Q
05
3Q
05
1Q
06
3Q
06
1Q
07
3Q
07
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
3Q
11
1Q
12
3Q
12
1Q
13
Private consumption, y-o-y
Retail loans, y-o-y, average (rhs)
-10%
-5%
0%
5%
10%
15%
40%
45%
50%
55%
60%
65%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Private consumption, % of GDPPrivate consumption, y-o-y (rhs)
31September 2013 INVESTMENT RESEARCH
Even though outstanding consumer debt is low relative to GDP, a problem emerged, as interest rates are too high
Source: State Statistics Service, Central Bank
Loans/GDP ratios are growingConsumer loan growth outstrips the expansion of corporate loans
Source: State Statistics Service, Central Bank
0%
20%
40%
60%
80%
100%
120%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Retail loans, y-o-y, average
Corporate loans, y-o-y, average
0%
10%
20%
30%
40%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Retail loans, % of GDP Corporate loans, % of GDP
32September 2013 INVESTMENT RESEARCH
The budget will remain in good shape, but the fiscal rule being introduced is problematic
One of the risks associated with the idea of reintroducing the fiscal rule from 2013 and replenishing the State Reserve Fund is that the government plans to continue to borrow on the local market even in the case of a budget surplus. A “borrowed safety net” is costly and does not seem reasonable, as it crowds out other borrowers.
The budget ran a surplus in 7m13, but will most likely turn into a small deficit by year end. As rates are high, the government’s borrowing plans are well behind plan, implying limited possibility to replenish the State Reserve Fund this year. Ruble depreciation will keep the breakeven oil price relatively unchanged.
The breakeven price in 2012 was around $110/bbl. It is impossible to calculate the future breakeven price of oil accurately, as it depends not on budgetary expenditures alone but on revenues as well. The latter is a function of the exchange rate, which itself depends on the current oil price. Hence, the future breakeven oil price is a function of the future oil price, so modeling depends on statistically cofounding and unpredictable variables. Meanwhile, the flexible exchange rate policy makes the budget more resilient to external shocks.
Rebuilding the State Reserve Fund to up to 7% of GDP by 2015 has become the real objective (albeit elusive) of state macroeconomic policy. It looks as though the rule will either be modified or outright abolished, as it was not even applied de facto in 1H13.
33September 2013 INVESTMENT RESEARCH
Russia’s breakeven oil price has risen substantially in recent years but seems to have stabilized as the ruble started to float
Source: Finance Ministry, Sberbank Investment Research Source: Finance Ministry, Sberbank Investment Research
Budgetary policy was generous in the past decade, and the State Reserve Fund shrank in 2009-10 before returning to growth in 2011.
0
50
100
150
200
250
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$ b
ln
Stabilization Fund State Reserve Fund National Welfare Fund
0
20
40
60
80
100
120
2003 2004 2005 2006 2007 2008 2009 2010 2011 20122013E
$/b
bl U
rals
Breakeven oil price Oil price
34September 2013 INVESTMENT RESEARCH
The budget breakeven oil price is only a theoretical concept and is a function of the oil price itself, not expenditures alone
Source: Sberbank Investment Research
80
90
100
110
120
130
140
150
60 70 80 90 100 110 120 130 140
Brea
keve
n oi
l pric
e, $
/bbl
Ura
ls
( if
the
RU
B/U
SD rat
e is
fixe
d)
Oil price, $/ bbl Urals
2010
2011
2012
35September 2013 INVESTMENT RESEARCH
Case study: the trade balance would remain highly positive and the budget deficit would be limited if the oil price were to stay at $80/bbl
Note: Data from January 2007 to June 2013Source: Central Bank, Finance Ministry, Sberbank Investment Research
Source: Central Bank, Finance Ministry, Sberbank Investment Research
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
60 70 80 90 100 110 120 130 140
Bal
ance
, % G
DP
Oil price, $/ bbl Urals
2012
0
5
10
15
20
25
25 50 75 100 125 150
Trad
e ba
lanc
e, $
bln
Urals, $/ bbl
36September 2013 INVESTMENT RESEARCH
The budget may look better than the government expects, R bln
Source: Finance Ministry
2012 2013E 2014E 2015E 2016E
Total revenues 12,855.5 12,865.9 13,485.5 14,767.5 15,908.1Total revenues, % GDP 20.6 19.3 18.2 18.0 17.4Total expenditures 12,895.0 13,387.3 13,847.0 15,235.7 16,451.8Total expenditures, % GDP 20.6 20.1 18.7 18.6 18.0Balance -39.4 -521.4 -361.5 -468.2 -543.7Balance, % GDP 0.0 -0.8 -0.5 -0.6 -0.6Budget deficit financing sources 39.4 521.4 361.5 468.3 543.7
State Reserve Fund (replenishment) -703.8 -373.4 -377.7 -351.1 -368.4National Welfare Fund 0.0 5.9 9.4 10.8 12.4Other sources of funding of the federal budget deficit 743.2 888.9 729.8 808.6 899.7
Net local borrowing 511.4 448.6 532.8 443.9 643.6Borrowing 911.9 1,213.2 974.1 1,034.8 1,253.3Redemption -400.4 -764.6 -441.3 -590.9 -609.7Net external borrowing 18.1 52.1 102.5 48.7 134.0Other 213.7 388.2 94.5 316.0 122.1
37September 2013 INVESTMENT RESEARCH
Budget expenditures in 2013-16, R bln
Source: Finance Ministry
2013E 2014E 2015E 2016E
Total expenditures 37.6% 35.8% 35.4% 34.9%Federal issues 2.1% 2.0% 1.9% 1.7%National defense 3.2% 3.4% 3.8% 3.8%National security and law enforcement 3.2% 3.0% 2.8% 2.5%National economy 4.7% 4.5% 4.3% 4.2%Housing and communal services 1.7% 1.7% 1.6% 1.5%Environmental protection 0.1% 0.1% 0.1% 0.1%Education 4.3% 4.1% 4.0% 4.0%Culture and cinematography 0.6% 0.5% 0.5% 0.5%Health 3.7% 3.5% 3.4% 3.4%Social policy 12.8% 11.8% 11.3% 11.1%Physical culture and sports 0.3% 0.3% 0.3% 0.3%Media 0.2% 0.1% 0.1% 0.1%State and municipal debt servicing 0.7% 0.7% 0.7% 0.7%
38September 2013 INVESTMENT RESEARCH
Research Department +7 (495) 258 0511
Manufacturing, Small and Mid CapSenior Analyst Mikhail Ganelin +7 (495) 933 9851Senior Analyst Igor Vasilyev +7 (495) 933 9842Assistant Analyst Ivan Belyaev +7 (495) 933 9853
Real EstateSenior Analyst Julia Gordeyeva, CFA +7 (495) 933 9846
ConsumerSenior Analyst Mikhail Krasnoperov +7 (495) 933 9838Senior Analyst Konstantin Fastovets +7 (495) 933 9858Assistant Analyst Artur Galimov +7 (495) 933 9833
TransportSenior Analyst Mikhail Ganelin +7 (495) 933 9851Senior Analyst Igor Vasilyev +7 (495) 933 9842Assistant Analyst Ivan Belyaev +7 (495) 933 9853
EconomySenior Economist Anton Stroutchenevski +7 (495) 933 9843Junior Economist Sergei Konygin +7 (495) 933 9848
Fixed IncomeHead of FI Research Alexander Kudrin +7 (495) 933 9847Senior Analyst Alexey Bulgakov +7 (495) 933 9866Senior Analyst Dmitry Poliakov, CFA +7 (495) 933 9836Analyst Sergey Goncharov +7 (495) 933 9854Assistant Analyst Nikolay Minko + 7 (495) 933 9857Assistant Analyst Alexander Golinsky + 7 (495) 258 0511
Head of Research Paolo Zaniboni +7 (495) 787 2381
Head of FI Research Alexander Kudrin +7 (495) 933 9847
StrategyChief Strategist Kingsmill Bond, CFA +7 (495) 933 9886Strategist Andrey Kuznetsov +7 (495) 933 9868Strateg./Quant Analyst Iskander Abdullaev +7 (495) 933 9839
Oil and GasSenior Analyst Oleg Maximov +7 (495) 933 9830Senior Analyst Alex Fak +7 (495) 933 9829Analyst Valery Nesterov +7 (495) 933 9832
UtilitiesSenior Analyst Alexander Kotikov +7 (495) 933 9841Analyst Andrey Trufanov +7 (495) 933 9831
Telecoms, Media and ITSenior Analyst Anna Lepetukhina +7 (495) 933 9835Assistant Analyst Maria Sukhanova +7 (495) 933 9856
Metals and Mining, ChemicalsAnalyst Irina Lapshina +7 (495) 933 9852Assistant Analyst Alexander Levinskiy +7 (495) 258 0511
FinancialsSenior Analyst Andrew Keeley +44 (20) 7936 0439Assistant Analyst Andrey Pavlov-Rusinov +7 (495) 933 9817
Senior Management
Co-Head of Sberbank CIB Ruben Vardanian, Alexander Bazarov
Chief Economist, Managing Director Evgeny Gavrilenkov
39September 2013 INVESTMENT RESEARCH
This research report is prepared by Sberbank CIB or its affiliate named herein and provides general information only. Neither the information nor any opinion expressed constitutes a recommendation, an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.
Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance.
Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional.
Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs or GDRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.
The information contained herein has been obtained from, and any opinions herein are based upon, sources believed to be reliable, but no representation is made that it is accurate or complete and it should not be relied upon as such. All such information and opinions are subject to change without notice.
From time to time, Sberbank CIB or its affiliates or the principals or employees of its affiliates may have or have had positions or derivative positions in the securities or other instruments referred to herein or make or have made a market or otherwise act or have acted as principal in transactions in any of these securities or instruments or may provide or have provided investment banking or consulting services to or serve or have served as a director or a supervisory board member of a company being reported on herein.
Sberbank CIB maintains strict internal policies, which are designed to manage any actual or potential conflicts of interest from harming the interests of investors.
Further information on the securities referred to herein may be obtained from Sberbank CIB upon request.
This report may not be reproduced, copied nor extracts taken from it, without the express written consent of Sberbank CIB.
For residents of the United States: This research report is being distributed in the United States by SBERBANK CIB USA, INC., which accepts responsibility for the contents hereof. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact SBERBANK CIB USA, INC., not its affiliate. Further information on the securities referred to herein may be obtained from SBERBANK CIB USA, INC. upon request.
For residents of the United Kingdom and rest of Europe: Except as may be otherwise specified herein, this research report is communicated to persons who are qualified as eligible counterparties or professional clients (as defined in the FSA Rules) and is made available to such persons only. The information contained herein is not intended for, and should not be relied upon by, retail clients (as defined in the FSA Rules).
© Sberbank CIB 2013
In accordance with US SEC Regulation AC, US regulatory disclosures and analyst certification can be found at http://www.troika.ru/eng/research/disclosure.wbp.