Kommersant
World Bank finds consumption in Russia unrelated to social policies
Consumer demand in Russia is influenced by unemployment rate fluctuations, rather than incomes, oil prices or social policies, the World Bank said in its latest reports on Russia’s economy.
The World Bank downgraded Russia’s GDP growth forecast from 4.4% to 4.0% in 2011 and to 3.8% in 2012 based on "the sharply rising uncertainties in the global economy” and “heightened risks to global growth and lower commodity prices.”
According to the report, if oil prices remain relatively high ($103/bbl in 2011 and $94.7 in 2012) and unemployment below 7%, consumption will continue growing due to the savings made during the recession. This fits with the Economic Development Ministry’s expectation that households will drive economic growth.
The World Bank simulated a stress-test of Russia’s economy, discovering that in a “shock scenario” with oil falling to $60 and unemployment rising to 7.5%, Russia’s GDP would only decline by 1.5% and consumption would still grow 0.3%. “Consumption in Russia seems resistant to shocks due to the ‘smoothing effect,’ and will grow faster than GDP in 2011-2012,” the report said.
The World Bank economists explored this effect in a separate simulation study, which indicated that unemployment was the most important factor affecting consumption: a 1% increase in the unemployment rate sends consumption down 2%, while GDP or oil price growth have a smaller effect.
Short-term income fluctuations do not seem to change consumption much. According to the analysts, Russia’s labor market responds to negative shocks with contracting salaries rather than rising unemployment. Therefore, Russians must be viewing income shocks as temporary and evening out their consumption at some average level. At the same time, they see employment shocks as long-term and immediately adjust consumption accordingly.
On the other hand, the World Bank discovered that government economic policies have little or no effect on household consumption. In other words, raising social benefits and increasing salaries of teachers, doctors and other public service employees do next to nothing to stimulate consumption.
This may be partly explained by ineffective targeting of social policies and social spending, said Sergei Ulatov, a World Bank analyst. This conclusion may come as an unpleasant surprise for the government, which has already planned a 17% rise in social spending for 2012 with the purpose of stimulating consumer demand.
Nezavisimaya Gazeta
Historic visits amid lack of certainty?
Nicolas Sarkozy and David Cameron became the first foreign leaders to visit Libya since the rebel takeover of Tripoli. Paris immediately proclaimed that this event is a symbol of France’s influence and military success. Meanwhile the skies over the rebels are far from cloudless.
The two European leaders were scheduled to meet with members of the Transitional National Council, give a news conference in Tripoli and visit Benghazi, the rebels’ unofficial capital.
“It’s an historic moment to go to Libya,” French Finance Minister Francois Baroin said. “The operation to remove the Libyan leader was a military success, a diplomatic success and the success of a certain idea of liberty, as well as a success for France’s position in the world.”
The British prime minister’s office announced the unfreezing of Libya’s assets of almost $950 million. Moreover, the UK mission to the UN submitted a draft resolution to the Security Council to ease sanctions against Tripoli and unfreeze the assets of Libya’s major oil companies and central bank. The draft resolution also calls for a UN office to be set up in the country to assist the interim government in maintaining security and preparing for future elections.
However, the situation is not all that unclouded. The new rulers admit that they still do not have the entire country under control. According to AFP reports, Col. Gaddafi loyalists are maintaining their stronghold in the colonel’s hometown of Sirte on the Mediterranean coast. Clashes are ongoing around oases in southern Libya.
Several other things mar the freedom fighters’ triumph. Rebels have been reported to carry out extrajudicial executions and unlawful detentions. The European Union condemned the attacks on people from Sub-Saharan countries and black Libyans who the rebels believe are loyal to Col. Gaddafi.
Paris and London along with the entire international community were also concerned about reports of the disappearance of man-portable air defense systems, presumably the Russian Igla (NATO reporting name Grouse) MANPADS, from weapon warehouses. According to the Daily Telegraph, over 15,000 MANPADS missiles have gone missing.
The hunt for the air defense missiles goes on led by American instructors. “It's a potential risk not only to Libya but to the region,” U.S. Assistant Secretary of State Jeffrey Feltman said. There is a danger these systems fall into the hands of al- Qaeda or other terrorist groups and be targeted at civil aircraft.
“The policy of Gaddafi was to scatter these missiles through civilian homes,” Mukhtar al-Akdar, a Libyan rebel commander, said adding that they had difficulties trying to collect the missiles as many locals are very pro-Gaddafi.
Vedomosti
Suspect names Berezovsky as possible contractor of Politkovskaya’s murder
Retired police colonel Dmitry Pavlyuchenkov, who has recently been charged with organizing the murder of Anna Politkovskaya, named fugitive oligarch Boris Berezovsky as the possible mastermind of the journalist’s assassination. He said the talks with the intermediary, Lom-Ali Gaitukayev, were held in Ukraine because the contractor could not enter Russia. According to business newspaper Kommersant, Pavlyuchenkov said he had been hired to follow the journalist and then Gaitukayev gave the order to kill her no later than October 7.
Pavlyuchenkov’s lawyers and investigators have declined to comment. Anna Stavitskaya, the lawyer acting on behalf of Politkovskaya’s children, said the initial file did not contain any evidence of Berezovsky’s possible involvement and that they do not want a randomly chosen scapegoat.
Berezovsky said he is not surprised by these new developments. He recalled that Vladimir Putin, who was president at the time of the murder, said the traces led to London. The businessman said he does not remember a Gaitukayev and that he “met with hundreds of Chechens.” His spokesperson, Yekaterina Korotova, said they have not received any new communication from the Investigative Committee.
Dmitry Dovgy, head of the Investigative Committee’s main department who was fired at the time of the first hearing and is now in prison for bribery, said in April 2008 that Berezovsky may have been involved in Politkovskaya’s murder. He said Berezovsky could have contracted the murder through Khozh-Akhmed Nukhayev and that the journalist was likely murdered not because of her publications, but because she was in opposition.
Investigative journalist Anna Politkovskaya was killed in her apartment block in Moscow on October 7, 2006. Charges were filed against Sergei Khadzhikurbanov, former police officer at the organized crime department, and brothers Dzhabrail and Ibragim Makhmudov, whose brother Rustam was believed to have executed the murder. Rustam Makhmudov, on the wanted list since 1998, was detained during a special military operation in Chechnya in 2011. In February 2009, the jury of a Moscow court found all of the accused in the case not guilty. During the first hearing of Politkovskaya’s murder, Dmitry Pavlyuchenkov was the state’s main witness.
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