Russia’s economic growth was 3.7 percent in the first half of 2011, as reported by the Russian Federal State Statistics Service.

The Russian economy continued along its upward trajectory in the first half of 2011. The country’s GDP, accounting for the effect of various seasonal factors, increased by 0.3 percent on a month-on-month basis up to June 2011. Positive trends in the manufacturing, the construction, as well as the retail sectors of the economy were substantial factors in the expansion of the gross domestic product. The GDP expansion for the first sixth months of the year was 3.9 percent, according to the Ministry of Economic Development. The growth in the GDP during the second quarter alone was 3.7 percent, mostly attributable to constructive developments in manufacturing, transportation, and retail. In nominal terms, the gross domestic product for the first two quarters of 2011 stood at RUR 24.056 trillion. 

The level of industrial production in the first two quarters of 2011 was 105.3 percent of the value where it had been for the

quarters of 2010. The level of industrial production in June was 101.1 in relation to the previous month. Still, in view of various seasonal factors, the expansion of industrial production up to the month in June 2011 reached 0.7 percent year-on-year.   

Manufacturing and industry

Industrial production expanded mostly because of the good performance of the manufacturing sector, just like in all previous years. Manufacturing activity in the month of June 2011 increased to 107.1 percent on a year-on-year basis. The level of production in the manufacturing industries increased 104.5 percent on a year-on-year basis by June 2011. The manufacturing industry expanded by 1.1 percent, without regard for the seasonal factors. In the first six months of 2011, the production of the basic types of energy resources expanded by 2 percent relative to the same six-month period of 2010. 

The level of extraction of fuel oil and energy in the first half of the current year demonstrated a 100.8 percent year-on-year growth. For the month of June, the expansion was 101.6 percent. Still, in the absence of seasonal factors, fuel oil and energy extraction in the month of June actually remained on the same level as they had been in May 2011.  

Production and transmission of electricity, gas, and water in the first six months of the current year grew only to 100.2 of percent of last year’s levels on a year-on-year basis. In the month of June, the figure increased to 101.5 percent. Thus, the growth of production and transmission of electricity, gas, and water in June 2011 went up by 0.1 percent on a month-on-month basis. 

The construction sector demonstrated expansion in the months of May and June following a brief decline in April. The increase in the construction sector stood at 0.8 percent in June on a month-on-month basis. In year-on-year terms, the expansion was at 1 percent. For the first six months of 2011, the value of work and services in the construction sector was RUR 1 721.5 billion, a figure that is 0.9 percent higher than the result for the same period of the previous year. The principal factor for growth was the launch of a number of construction projects that were started earlier with the target date in the second half of 2011. A considerable increase in the demand for housing was also a factor in the expansion of the construction industry. In the month of June 2011, 5.4 million square meters of residential floor space was built in Russia, which is the highest figure since the beginning of this year.

Retail trade

Retail trade in Russia totaled RUR 8 728.1 billion in the first half of 2011, a figure 5.3 percent higher than the corresponding indicator for the first two quarters of 2010. Intensified retail activity continued to fuel economic growth up to and including June 2011. Without regard for seasonal factors, the growth in retail sales was 0.5 percent in June, as compared to May 2011. Year-on-year growth as of June 2011 totaled 5.6 percent. Retail goods other than food accounted for 52.1 percent of retail trade as of June 2011. Food items accounted for 47.9 percent. 

Inflation

The rate of inflation in the Russian consumer market for the first half of the year was 5.0 percent, as compared to 4.4 percent in the first half of 2010. In annual terms, inflation remained at 9.4 percent as of the end of June. The level of inflation during April and May was 9.6 percent.

Prices for food from January to June increased by 5.0 percent, as compared to 5.4 percent in the first half of 2010. Food prices accounted for 1.9 percent in the cumulative inflation rate. Still, the price on food items in June decreased for the first time since October 2009, even if only slightly by 0.2 percent.

Consumer goods price index

Overall, prices for consumer good went up to 100.2 percent of their previous level, and the consumer price index stood at 105.5 percent. The index reached 104.4 percent in 2010. The consumer price index for the cities of Moscow and St. Petersburg was 105.3 percent and 105.0 percent in the first half of the year respectively.

The average sustenance basket in the regions across Russia was RUR 2 761.5 on the last day of June. The sustenance level declined 1.6 percent on a month-on-month basis; however it did increase 5.2 percent in the first half of the year. The sustenance minimum was RUR 3 239.4 for Moscow. In St. Petersburg, the minimum was RUR 3 093, up more than 6.9 percent in the first half of 2011.

Industrial price index

The prices of industrial producers increased by 7.9 percent in the first six months of the year. Inflation in the national consumer market contributed to 5 percent of that increase. At the same time, the price of industrial producers went down by 2.2 percent on a month-on-month basis in the month of June. The drop in the prices from among the companies in the mining sector was as high as 7.3 percent. In the manufacturing industry, the decline was 0.5 percent. The prices of industrial producers and generators and suppliers of electricity, gas, and water went down 0.6 percent.   

The prices of producers in the mining sector rose 14.4 percent in the first half of 2011. The rate of the increase in prices was 5.5 percent for the manufacturing industries. In production and supply of electricity, gas, and water, the growth rate was 8.6 percent.

The cost of cargo transportation increased by 11 percent from January to May 2011, though it only increased 0.1 percent in the month of June.

Disposable income

In nominal terms, the income of the Russian population in the six months of the current year was RUR 15 999 billion, an amount 8.3 percent higher than the figure reported for the first half of 2010. Cash disbursements also increased by 9.8 percent, ending at RUR 15 971.3 billion. As such, cash disbursements of the Russian population were RUR 52.3 billion above the population’s revenues. Last year, disbursements were RUR 155 billion above the revenues. The disposable income of the population with the adjustment for the consumer price index decreased by 1.4 percent in the first half of 2011. According to preliminary estimates, the disposable income grew by 0.7 percent in June.

The average gross monthly payroll as of June 2011 was RUR 24 602, a figure 14 percent higher than the payroll amount as of June 2010. The nominal wages in June 2011 stood at RUR 22 353 per month, an increase of 12.2 percent on a year-on-year basis. Large companies reported payroll arrearages of RUR 2.43 billion as of July 1, 2011 – 7.7 percent less than the amount of arrearages at the start of June. In manufacturing industries, payroll arrearages decreased by a whole RUR 112.6 million.

Unemployment

The number of economically active adults in Russia was 76 million people in June 2011, a number that is more than 53 percent of the country’s overall population. Of those gainfully employed as of May 2011, 48.7 percent worked for big companies, as opposed to small and medium businesses.

The number of unemployed individuals in accordance with the standards of the International Labor Organization went down by 600 thousand people in the second quarter of the current year, declining to five million people. As such, the unemployment rate is now 6.1 percent. The number of unemployed decreased by 1.2 million people since the start of the year until the month of May.

The number of officially registered unemployed individuals has also been declining as of February 2011. At this time, the number of registered unemployed people is 1.43 million, 441 000 less than at the end of June 2010.

Foreign trade

The value of exports of Russian origin in the month of June 2011 stood at USD 44.6 billion, a figure 137.8 percent of the export value for June of 2010 and 100.1 percent of the export value for May 2011. Exports to countries beyond the borders of the Commonwealth of Independent States increased by 38.6 percent up to the month of June on a year-on-year basis. These exports now have the value of USD 37.9 billion. Exclusively C.I.S. exports went up by 33.7 percent, reaching USD 6.7 billion. Countries from outside the C.I.S. accounted for 1.5 percent less of the total amount of Russia’s exports. The rise in the value of exports from June 2010 to June 2011 can be attributed to the increasing prices of Russia’s prime export commodity, namely crude oil.  

Imports in the month of June were USD 28.0 billion, a result that is 142.6 percent of the figure reported in June 2010 and 100.2 percent of the amount for May 2011. The importation of goods from the states beyond the borders of the C.I.S. increased 40.4 percent year-on-year by June 2011. The value of those imports stood at USD 23.5 billion. C.I.S. imports also increased by 55.8 percent on a year-on-year basis and reached USD 4.5 billion. Imports from the countries of the C.I.S. increased 48 percent in year-on-year terms in the first half of 2011. The combined value of imports from beyond the C.I.S. increased 44.9 percent on a year-on-year basis up to June 2011. In particular, the value of imported engineering products increase 52.6 percent, the value of imported food products went up 37.8 percent, the value of imported chemical products rose 28.3 percent, and the value of imported textiles and footwear increased by 16.1 percent. At the same time, in the month of June 2011, the value of imports from states beyond the borders of the C.I.S. declined 2.3 percent on a month-on-month basis.

Altogether, Russia currently has a foreign trade surplus of USD 16.6 billion, a number that went up 30.4 percent from June 2010 to June 2011.  

Investment

While investment activity remained weak in the first quarter of 2011, the three-month period from April to June witnessed a significant acceleration in the rate of investment projects realized in Russia. At the same time, investment activity began to decline by the end of the second quarter of 2011. As such, the growth rate for investment in the month of June was 0.4 percent. In April and May, the growth rate was 5.3 percent and 4.3 percent.

In June, fixed asset investments stood at RUR 900.3 billion, a figure that reflects an increase of 4.7 percent on a year-on-year basis and of 19.5 percent on a month-on-month basis. The growth rate for fixed asset investment in the month of June was 4.7 percent. Among the most significant investment projects are the construction by the Liebherr group of companies of a EUR 200 million plant in Dzerzhinsk (a city located 40 kilometers from Nizhny Novgorod) to manufacture mining and digging machinery and some key components for flight control systems; a new RUR 5 billion unit to roll out bleached chemi-thermomechanical pulp at the pulp and paper mill Kama in the town of Krasnokamsk, Perm krai, and an RUR 4.3 billion first stage of a new copper processing plant of Bashkirskaya Med (part of UMMC’s primary resource base) in the Russian republic of Bashkortostan. Altogether, the level of investment has increased by 2.7 percent in the first half of 2011 as compared to the first half of 2010.

FDI (Foreign Direct Investment) in the Russian economy stood at USD 27 billion in the first half of 2011, as reported by Prime Minister Vladimir Putin at the session of the Commission on Monitoring Foreign Investment. Foreign direct investment in the first half of 2011 rose by 39 percent altogether.

As the estimates of the Central Bank of Russia reflect, the total private capital outflow in the second quarter of the year decreased to USD 9.9 billion.

National reserves

At the start of January 2011, the international reserves of the Russian Federation stood at USD 479.379 billion. These reserves went up in the first two quarters of the year by 9.4 percent, or USD 45.148 billion, to end at USD 524.527 billion. In the second quarter, reserves increased by USD 22.067 billion, a 4.4 percent quarter-on-quarter increase.

The National Wealth Fund held USD 119.11 billion on June 1, 2011, down from USD 130.03 billion as of October 1, 2010 and USD 152.08 billion as of January 2010.   

Debts

The debt of the Russian government stands at USD 34.203 billion, which is approximately the level that it had been at in January.

The cumulative sovereign debt of the Russian Federation as of June 1, 2011 stood at USD 532.222 billion, up from USD 488.654 in January 2011. In the first half of 2011, the debt rose by 8.9 percent, or USD 43.568 billion.

The greatest share in the increased indebtedness was generated by banks that increased their external debts by 23.4 percent, or USD 29.81 billion. The total amount of external debt the banks hold is now USD 157.024 billion. Companies in sectors other than finance also experienced indebtedness increases of USD 34.441 billion, for the total indebtedness of USD 328.535 billion. The increase was 11.7 percent. 

Oil prices

The average price of Urals crude oil that Russia exports was USD 111.7 per barrel in June 2011, which was about 50.5 percent more than where it had been in June of 2010. The average price of Urals crude oil in the first half of 2011 was USD 108.3 per barrel.