Page 13 - IFR Opportunities in Russian capital markets

CHAPTER 01
ifrintelligence reports/Opportunities in: Russian Capital Markets
stagnation, or it could follow the experience of the so-called Asian Tigers in the 1980s and boom. The key in these two scenarios is that Latin America was investing about 20% of GDP a year, whereas SE Asian countries were investing about 25% of GDP.
The good news is that domestic fixed investment began to take off in 2006 and is expected to be a major contributor to growth in 2007. Russia's fixed investment was up 13.5% in 2006 compared to the previous year, according to Rosstat, the fastest growth since 2000 and easily beating out the Economic Development and Trade Ministry start-of-year forecast of 11.3%. And it was accelerating towards the end of the year, when the December-to-December gain in fixed investment was up 16.5%. Russian GDP statistics are given in Table 1.1 and sector growth details in Table 1.2.
Arkady Dvorkovich, the Head of the Russian President's Expert Department says: "There are many unsettled problems in the manufacturing industry. The most important problems are a low com- petitiveness of products compared with import goods and the peak load of industrial capacities
in some sectors. As far as extractive sectors and the distribution of electric power, gas and water are concerned, these sectors have problems with the infrastructure rather than with the demand. It will hardly be possible to settle them within a short period of time." (See Chapter 3 for more
on equity drivers.)
Table 1.1: Russian GDP by production and use, 2005, 2006 (RUBbn, %)
GDP by production, nominal, Rb bn
1Q06 2Q06 3Q06 2005 2006
GDP 5,722 Extraction of raw materials 520 Manufacturing 800 Construction 201 Trade 1,134 Transportation & IT 501 Operations with real estate 404 GDP by production, real, YOY, %
GDP 5.5 Extraction of raw materials 1.7 Manufacturing 4.6 Construction 1.6 Trade 11.0 Transportation & IT 4.0 Operations with real estate 4.3 GDP by use, nominal, Rb bn
GDP 5,722 Consumption 3,892 households 2,734 Gross investment 786 gross capital formation 720 Net exports 934
GDP by use, real, YOY, %
GDP 5.5 Consumption 8.5 households 10.7 Gross investment 13.4 gross capital formation 5.8 Net exports -11.7
6,343 7,224 650 642 980 1,103 315 420
1,153 1,214 590 628 475 545
7.4 6.5 3.5 3.8 7.1 6.3
12.3 14.5 10.1 6.6 7.9 7.9 8.9 8.5
6,343 7,224 4,147 4,440 2,970 3,222 1,172 1,787 1,083 1,355
956 861
7.4 6.5 9.6 9.5 12 11.7 14.6 13.4 13.6 12.4 -12.3 -27
21,615 2,070 3,568 1,034 3,616 1,902 1,829
6.4 0.9 5.7
10.6 9.9 6.8 11.8
21,615 14,360 10,626
4,350 3,848 2,932
6.4
9.7 12.7 7.2 8.3 -12.8
26,621 2,375 4,362 1,356 4,484 2,258 2,254
6.7 2.1 4.9
14.0 8.7 9.4 5.6
26,621 17,728 12,880
5,416 4,795 3,372
6.7
9.0 10.7 13.2 13.7 -14.3
Source: Rosstat
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