Janis Kluge Profile picture
Sep 28 8 tweets 5 min read
#Russia's new draft #budget (2023-2025) has reached the Duma, so details are available. A big day for statistics-hungry people. Here is the link (I needed VPN to access). sozd.duma.gov.ru/bill/201614-8. The "Poyasnitel'naya zapiska" is the juicy part. 1/
The underlying assumptions prepared by the Economy Ministry: The economy will shrink 2.9% this year and another 0.8% next year. Pretty optimistic, especially for next year. Growth of 2.6% in 24/25, but who knows what the world will look like in 24/25. /2
#Russia expects a steady increase in oil exports from 250m to 255m to 260m tons in 23/24/25 after 231m tons in 2021 and an estimated 243.1m this year, with prices falling from 80 USD this year to 70.1 to 67.5 to 65 USD in 23/24/25. Oil products: Shrinking exports expected. 3/
#Russia is not expecting halted #gas exports to Europe to resume (note: this forecast was created long before the NS1/2 explosions). In comparison to last year's budget outlook, expected gas exports are slashed in half (from 237.5 bcm to 125.2 bcm in 2023). 4/
Budget spending was a lot higher than expected this year. In the next years, Minfin plans to not increase nominal expenditures (29tn), despite inflation-index social payments and war. They probably want to dial back #sanctions relief for companies, but still: Very unrealistic! 5/
Here are the details on "National defense" and "National security". Spending on both is skyrocketing. Defense was planned at 3.5tn. Now it is 4.7tn this year (before mobilization!). Defense/security in 2023 are 43.4% and 48.9% higher than in last year's guidelines. 6/
As is appropriate for a supervillain country, #Russia is drastically cutting spending on the environment. 7/
I uploaded the "zapiska" for whomever wants to take a look, as a PDF file here. 8/8 dropbox.com/s/fpmutyx01sbb…

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More from @jakluge

Sep 28
#Russia's industrial production slightly fell in August after rising in July, in seasonally adjusted terms. Many parts of Russia's industry are still struggling, and new problems are on the horizon. Some highlights below. 1/
(link to latest Rosstat report
rosstat.gov.ru/storage/mediab…) Image
Russia is unable to fix the problems of its automobile industry so far. In August, 24,700 cars were produced. 2/ Image
Oil production in August was 45 million tons, which is 2.1% higher than last year, but 1.1% below July's output.
Gas production in August was 38.5 bcm, which is 22.3% lower than last year, but 5.4% above July's output. 3/
Read 13 tweets
Sep 11
1/ #Sanctions are hitting #Russia's economy in many ways, but two goals are key:
1.) Diminish Putin's ability to redistribute rubles within Russia (depends mostly on #budget).
2.) Diminish Russia's ability to #import (depends on availability of foreign exchange AND restrictions).
2/ It all boils down to these two things. If the budget is doing fine and imports are doing fine, then the regime can compensate for any sanctions damage with transfers. If there is problem with either one, the government faces difficult foreign/domestic policy tradeoffs.
3/ The budget and the ability to import are the "transmission belts" through which economic effecs of #sanctions become political. The budget is the pie that Putin can share among military/elites/population. The imports are decisive for the size of the pie and how tasty it is.
Read 12 tweets
Sep 10
1/ On the #oil price cap: After listening to this excellent Brookings discussion, I am more optimistic it could work, but I also believe it may need to be postponed by 8-12 weeks. Here is why...
2/ First on the cost of delaying #sanctions: The sooner, the more, the better. But this is just a small delay, and the goal - depriving Russia of FX and budget revenues - is a multi-year goal that will be gradually achieved, because Russia still has considerable buffers in both.
3/ The key question is of course Russia's reaction: Russia could reduce its exports, causing oil market prices to rise. From Russia's perspective, compliance would show weakness. Russia has shown it can reduce some production in 2020, and it is willing to bear costs (eg: gas...).
Read 14 tweets
Sep 8
1/ #Russia's Finance Ministry stopped publishing detailed data #budget spending in April. But with a few calculations, it's possible to get a pretty good picture of what's going on. Due to the war, #defense spending until July was at least ~1.2tn RUB (~20bn USD) higher than 2021.
2/ This also means that defense spending until July was >1tn higher than planned. Of course this does not account for changes in Russia's stocks of weapons and ammunition. Refilling those will be much more expensive, but it was not yet visible in the budget until July 2022.
3/ Here is how defense spending can be calculated: Russia does not publish detailed monthly spending data, but they still publish a current snapshot on ongoing spending on "budget.gov.ru". The data here is incomplete, a huge chunk is missing.
Read 12 tweets
Sep 3
1/ Is #Russia flaring gas on a massive scale? Here is another approach to solving that question: Natural gas and gas condensate production should normally go hand in hand. Here is a dot plot of Russian monthly production of gas and gas condensate (unstabilized) until April 22.
2/ The correlation is strong, as expected (r=0.85). My assumption is that gas condensate doesn't have to be flared, because it is easier to store than natural gas. Thus, if #Gazprom is reducing its production by flaring the correlation should break down.
3/ If #Gazprom is reducing its production by shutting down wells, the correlation should rather remain intact (less condensate production). Gazprom's natural gas production started falling dramatically in April.
Read 5 tweets
Sep 1
1/ Most economic indicators in #Russia's monthly statistics have stabilized. One exception: The crash in wholesale turnover seems to be continuing unabated. Wholesale turnover has fallen by 25.4% year over year! What's happening? Spoiler: It's Putin's gas blackmail backfiring. 1/
2/ Rosstat hasn't published the individual components of wholesale turnover in absolute terms (at least I couldn't find it), but it is possible to calculate them based on the relative weight of different sectors, which Rosstat publishes.
3/ Here is the resulting wholesale turnover (in current prices). There are some seasonal changes (not important here). Important is the general role that different sectors play. Wholesale turnover is dominated by raw materials, more precisely: energy trade.
Read 8 tweets

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