Статья Сергея Гуриева о бизнесе в России - перепост с ｆｔ.com
Russia is not a place you would want to do business
By Sergei Guriev
The country could grow at 5% to 6% a year for all the wrong reasons, writes Sergei Guriev
©Reuters
Things should be pretty rosy now in Russia. While commodity prices are not rising, they are still high. Sovereign debt is low - about 10 per cent of gross domestic product - and the budget is balanced. Its sovereign wealth funds are a healthy size and there is no political instability. There are clear investment opportunities. So why does Russian growth seem to be running out of steam?
Indeed, only one year ago, as he returned to the presidency, Vladimir Putin was talking about growth of 5 to 6 per cent each year. One of the first decrees he signed on his inauguration last year - decree 596 - included a promise to increase the labour productivity in 2018 by 50 per cent relative to 2011, implying 6 per cent annual growth. As recently as January, Dmitry Medvedev, the prime minister, reaffirmed his commitment to a 5 per cent GDP growth target.
But, in April, Andrei Belousov, Russia’s minister of economic development, downgraded his growth forecasts for the country, announcing that it faced a risk of recession in the third quarter of this year. He cut the official projection for growth for 2013 from 3.6 per cent to 2.4 per cent.
It was a bleak assessment - one not shared by independent analysts. Happily, things now look better. This is, of course, good news but it must all be put in to perspective. Today’s debate is centred around whether Russian gross domestic product will grow by more or less than 2 per cent. Is the 5 or 6 per cent that we wanted a reasonable goal?
It is below the growth performance of China and India - yet Russia is a much richer country. The target is also below the 7 per cent achieved in the period between 1999-2008. And Russia has picked some low-hanging fruit; and some tailwinds - particularly around commodity prices - are no longer at our backs.
But if we look again at the economic history of recent growth miracles - such as in east Asia - we will see that when other countries were at the same development level as today’s Russia, they were growing at 5 to 6 per cent per year. There is no good reason to believe that Russia cannot achieve such growth. So why can’t it manage it?
The reason is straightforward. Further economic growth requires investment in new and existing businesses. This requires a good business climate - in particular, protection of property rights and rule of law. In this sense, Russia is not doing well. In all rankings of business regulation, investment risk and corruption, the country trails most emerging market economies.
The Moscow government understands this problem very well. Mr Putin’s decree 596 also ordered his government to improve the business climate. In particular, he wanted Russia to move from being the 120th best country in the world to do business - its place in the World Bank’s 2012 rankings - to 50th in 2015 and 20th in 2018.
When Mr Putin first announced this goal in an investment conference in early 2012, investors cheered. Indeed, such drastic improvements would open up the potential for small and medium-sized business. The president’s economic programme includes many other measures to improve the outlook for investors, such as privatisation, co-funding of investment in non-resource sectors and incentives for regional governors to improve local business climates.
So why are investors not excited? Why doesn’t growth pick up? The problem is that investors have heard these promises too many times before and are no longer convinced by words without deeds. The lack of confidence in Russia among both domestic and foreign investors is not reflected only in the cross-country rankings of perceptions of investment risks and corruption. Investors put their money where their mouths are.
Unlike other developed and developing countries’ stock markets, Russia’s has not recovered from the crisis. It stands at just half of its 2008 peak. The stock market index trades at a price-to-earnings ratio of 5 or lower; no emerging market is below 10. China’s index is at 11 or 12. Prices in India and Brazil are in line with those in the US - about 15 times earnings.
Low valuations are striking given high oil prices, which have always been good for Russian stocks. Another striking phenomenon is continuing capital flight. Despite the significant risks in other regions, from emerging markets through to the eurozone and the US, capital is leaving Russia.
In 2011, the net capital outflow was 4.5 per cent of GDP, and in 2012 it was almost 3 per cent - or $54bn. In the first quarter of 2013 alone, the net capital outflow was $26bn - more than 1 per cent of annual GDP. As well as the unprecedentedly low stock market valuations, capital flight is a genuine vote of no confidence in Russia’s growth potential. Investors vote with their feet against governments that are unwilling or unable to deliver on their promises.
The writer is former rector of the New Economic School in Moscow and a visiting professor of economics at Sciences Po, Paris
By Sergei Guriev
The country could grow at 5% to 6% a year for all the wrong reasons, writes Sergei Guriev
©Reuters
Things should be pretty rosy now in Russia. While commodity prices are not rising, they are still high. Sovereign debt is low - about 10 per cent of gross domestic product - and the budget is balanced. Its sovereign wealth funds are a healthy size and there is no political instability. There are clear investment opportunities. So why does Russian growth seem to be running out of steam?
Indeed, only one year ago, as he returned to the presidency, Vladimir Putin was talking about growth of 5 to 6 per cent each year. One of the first decrees he signed on his inauguration last year - decree 596 - included a promise to increase the labour productivity in 2018 by 50 per cent relative to 2011, implying 6 per cent annual growth. As recently as January, Dmitry Medvedev, the prime minister, reaffirmed his commitment to a 5 per cent GDP growth target.
But, in April, Andrei Belousov, Russia’s minister of economic development, downgraded his growth forecasts for the country, announcing that it faced a risk of recession in the third quarter of this year. He cut the official projection for growth for 2013 from 3.6 per cent to 2.4 per cent.
It was a bleak assessment - one not shared by independent analysts. Happily, things now look better. This is, of course, good news but it must all be put in to perspective. Today’s debate is centred around whether Russian gross domestic product will grow by more or less than 2 per cent. Is the 5 or 6 per cent that we wanted a reasonable goal?
It is below the growth performance of China and India - yet Russia is a much richer country. The target is also below the 7 per cent achieved in the period between 1999-2008. And Russia has picked some low-hanging fruit; and some tailwinds - particularly around commodity prices - are no longer at our backs.
But if we look again at the economic history of recent growth miracles - such as in east Asia - we will see that when other countries were at the same development level as today’s Russia, they were growing at 5 to 6 per cent per year. There is no good reason to believe that Russia cannot achieve such growth. So why can’t it manage it?
The reason is straightforward. Further economic growth requires investment in new and existing businesses. This requires a good business climate - in particular, protection of property rights and rule of law. In this sense, Russia is not doing well. In all rankings of business regulation, investment risk and corruption, the country trails most emerging market economies.
The Moscow government understands this problem very well. Mr Putin’s decree 596 also ordered his government to improve the business climate. In particular, he wanted Russia to move from being the 120th best country in the world to do business - its place in the World Bank’s 2012 rankings - to 50th in 2015 and 20th in 2018.
When Mr Putin first announced this goal in an investment conference in early 2012, investors cheered. Indeed, such drastic improvements would open up the potential for small and medium-sized business. The president’s economic programme includes many other measures to improve the outlook for investors, such as privatisation, co-funding of investment in non-resource sectors and incentives for regional governors to improve local business climates.
So why are investors not excited? Why doesn’t growth pick up? The problem is that investors have heard these promises too many times before and are no longer convinced by words without deeds. The lack of confidence in Russia among both domestic and foreign investors is not reflected only in the cross-country rankings of perceptions of investment risks and corruption. Investors put their money where their mouths are.
Unlike other developed and developing countries’ stock markets, Russia’s has not recovered from the crisis. It stands at just half of its 2008 peak. The stock market index trades at a price-to-earnings ratio of 5 or lower; no emerging market is below 10. China’s index is at 11 or 12. Prices in India and Brazil are in line with those in the US - about 15 times earnings.
Low valuations are striking given high oil prices, which have always been good for Russian stocks. Another striking phenomenon is continuing capital flight. Despite the significant risks in other regions, from emerging markets through to the eurozone and the US, capital is leaving Russia.
In 2011, the net capital outflow was 4.5 per cent of GDP, and in 2012 it was almost 3 per cent - or $54bn. In the first quarter of 2013 alone, the net capital outflow was $26bn - more than 1 per cent of annual GDP. As well as the unprecedentedly low stock market valuations, capital flight is a genuine vote of no confidence in Russia’s growth potential. Investors vote with their feet against governments that are unwilling or unable to deliver on their promises.
The writer is former rector of the New Economic School in Moscow and a visiting professor of economics at Sciences Po, Paris