Business Monitor International


Russia Business Forecast Report

Published 19 November 2014 | Quarterly

  • 49 pages
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  • Includes 3 free updated quarterly reports
 
$1,195.00
Russia Business Forecast Report

Core Views

  • President Vladimir Putin's near-record popularity belies the rapidly rising medium-term risks he faces, mostly stemming from economic weakness. Once the 'high' of the Ukraine conflict wears off, and ordinary citizens' livelihoods suffer, Putin will become vulnerable to opposition protests, or even internal rivals, meaning that he will not be guaranteed re-election in 2018.

  • Russia's economic weaknesses will constrain its much touted geopolitical 'revival'. Russia will still defend its perceived vital interests, militarily if necessary, but the costs of doing so will increase. For the next few years, we expect a cool period to prevail in Russia-West relations, which will result in Russia building closer ties with China. However, we think that a genuine strategic partnership between Moscow and Beijing is unlikely to materialise, because the two are ultimately rivals in Central Asia.

  • The plunge in oil prices throughout H214 has further darkened the macroeconomic outlook for Russia, which is already under severe pressure from geopolitical tensions with the West, prompting us to revise down our growth forecasts for 2014-2016. Nevertheless, there are some mitigating factors which underpin our slightly above-consensus forecasts - of 0.5% and 1.0% for 2014 and 2015, respectively, such as the suppression of import growth. Higher import prices have suppressed import growth, flattering the headline real GDP growth figure, and have boosted somewhat demand for domestic production.

Major Forecast Changes

  • We expect Russian inflation to increase again over Q414, due to unprecedented rouble depreciation, which will lead the Russian Central Bank to raise its policy rate for the fourth time in 2014. However, underlying fundamentals within the economy will bring inflation in line over the medium term. We have revised upward our inflation forecast to 7.8% from 7.1% previously.

Risk To Outlook

Deterioration in geopolitical tensions between the West and Russia...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Risk To Outlook
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Putin's Popularity Masks Rising Medium-Term Risks
8
Table: Politic al Overvi ew
8
Foreign Policy
10
Economic Weakness To Constrain Geopolitical 'Revival'
10
Long-Term Political Outlook
13
Kremlin Facing Tougher Challenges Over 2014-2024
13
Chapter 2: Economic Outlook
17
SWOT Analysis
17
BMI Economic Risk Index
17
Economic Activity
18
Oil Prices Aggravating An Already Grim Macro Outlook
18
table: GDP By Expenditure
18
Balance Of Payments
20
Balance Of Payments Crisis Risks Rising
20
Table: Current Account
21
table: Chang es To Priv atis ation Sch edu le
22
Fiscal Policy
23
Modest Fiscal Deficits Masking Vulnerabilities
23
table: Fiscal Policy
23
Monetary Policy
25
Return To Easing in 2015
25
table: Monetary Policy
26
Currency Forecast
27
Rouble To Find Temporary Strength
27
table: CURRENCY FORECAST
27
Chapter 3: 10-Year Forecast
29
The Russian Economy To 2023
29
Structural Deficiencies Weighing On Growth
29
table: Long-Term Macroeconomic Forecasts
29
Chapter 4: Operational Risk
31
Russia Aggregate SWOT Analysis
31
Operational Risk Index
31
Operational Risk
32
table: Operational Risk
32
Transport Network
33
table: Emerging Eu rop e - Transpo rt Network Risks
34
Economic Openness
38
table: Europe - Economic Openness Risk
39
table: Top 5 Product Imports (USDmn)
40
table: Top 5 Trade Partners - Product Exports (USDmn)
41
Chapter 5: Key Sectors
43
Infrastructure
43
table: Construction And Infrastructure Industry Data
44
table: Construction And Infrastructure Industry Data
45
Oil & Gas
48
Other Key Sectors
53
table: Pharma Sector Key Indic ato rs
53
table: Telecoms Sector Key Indicators
53
table: Defence and Security Sector Key Indicators
53
table: Food and Drink Sector Key Indicators
54
table: Autos Sector Key Indicators
54
table: Freight Key Indicators
54
Chapter 6: BMI Global Assumptions
55
Global Outlook
55
Reality Check: Uncertainty Reigns
55
Table: Global Assumptions
55
Table: Developed States, Real GDP Growth, %
56
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
56
Table: Emerging Markets , Real GDP Growth , %
57

The Russia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Russia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Russia's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Russia's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Russia's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Russia, including currency volatility, the commodity price boom and protectionist policies.

The Russia Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Russia economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Russia through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Russia Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Russia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Russia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Russia over the next 5-years?

BMI's Russia country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Russia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Russia.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Russia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Russia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Russia, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Russia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Russia will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Russia's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express