1) New data on Russia's federal #budget in February is out. Some normalization after a high January deficit was expected, but the opposite happened. The deficit grew to 2.6 tn RUB, 1.7% of GDP after two months. Revenues in February 2023 were 1.8 tn RUB, expenditure 2.6 tn RUB.
2) Last year around this time, the Russian budget was firmly in positive territory. The January 2023 deficit was clearly not representative, but an additional deficit of 800 billion RUB in February shows it's not a one-off phenomenon.
3) On the revenue side, the problem for Russia's finance ministry are the very small oil and gas revenues. This will slightly improve in the coming months, as Russia will adopt a new formula to calculate taxes (based on a higher assumed oil price).
4) On the expenditures side, the war is forcing the government to pay upfront for weapons. This is supposed to lead to lower spending in December, but I believe that when I see it. Overall, it still looks like spending will be significantly higher than planned.
5) Important to take into account strong fluctuations month-to-month in Russia's budget, which happen for different reasons (seasonality, tax rules, one-off payments etc.). But based on today's data, Russia's government will need to borrow a lot more than planned for this year.
1.) Sanctions did not work immediately 100%, because Russia was able to export so much. The West needed Russian oil to stay on the world market to keep prices from rising.
2.) Russian businesses were able to reestablish supply chains quicker than expected.
3.) Public spending rose by more than 30% - a strong fiscal stimulus for Russia's economy.
4.) Sanctions should not be underestimated, will be tightened with new measures and pressure on 3rd countries like Turkey.
5.) Budget deficit could reach ~4% of GDP at current oil price.
One missing aspect is domestic change in Russia. There was a continuous process if increasing radicalisation of Putin, both in domestic and foreign policy. The only exception were arguably the Medvedev years. Putin has contributed more to his own growing resentment than the West.
The second missing aspect is Zelensky's sincere attempt to revive the peace process (together with GER and FRA), which was completely rebuffed by Moscow, which chose to hand out Russian passports en masse in Donbas right after Ze was elected.
#Russia announced it will cut #oil production (read: #sanctions affect oil exports) by around 0.5m barrels per day. The result is higher oil prices and lower export volumes. Will Russia earn more or less as a result? It depends on elasticities and Russia's market share. 1/4
Russia's share in world oil markets is roughly 10%. To compensate for lower exports, i.e. total revenue of all oil producers needs to rise 10x the value of the 0.5m barrels lost volume. This would mean a low price elasticity of demand of -0.1 if supply/reserves are stable. 2/4
Most estimates of short run demand elasticity are close to -0.1, but elasticities are already very different for 3-6 months time. So, in theory, cutting 0.5m bpd could be revenue neutral for Russia, but already after a short time normalizing prices lead to a net revenue loss. 3/4
Das Problem ist noch ein anderes als ich heute morgen dachte (danke an die Hinweise in den Kommentaren). Der Chart bleibt Quatsch, aber aus anderen Gründen. Hier erstmal die Entwicklung des iranischen BIP nach Kaufkraftparität in Dollars. Man sieht den Einbruch wg. Sanktionen.1/5
Wie kommt das bombastische Wachstum auf dem Steingart/Statista/IWF-Chart zustande? Die Ursache ist der zugrunde liegende "offizielle" Wechselkurs. Der hat nichts mit dem (Markt-) Wert der iranischen Währung zu tun sondern ist an den Dollar gekoppelt. 2/5
Wenn man in Iran Dollars/Euros tauschen will, ist der Kurs aber ca. das 10fache des offiziellen Wechselkurses. Wegen der hohen Inflation hat sich er "echte" (Markt-) Kurs immer weiter vom "offiziellen" entfernt. 3/5 de.wikipedia.org/wiki/Iranische…
In the first half of 2022, more people were leaving Russia than arriving, which is very unusual and clearly related to the war. Since July, Russia is registering net migration inflow again. 1/3
In total, Russia registered a net migration outflow for 1-10/2022. Russia's population was shrinking, but mostly due to a massive increase of deaths from Covid-19 and a negative impact of demography. Fallen soldiers would be a visible, but minor component in the deaths bar.2/3
Immigration to Russia was relatively normal in January-October 2022 (around 550,000). But emigration from Russia increased by 350,000 compared to the same period in 2021. This is probably not guest workers, but Russians leaving because of the war. 3/3