Russia in the spotlight Q3 2015
- Protecting Russia from oil price swings: the tale of the flexible ruble
- The Russian retailers: adjusting to their consumers’ new money-saving habits
- Inflation is taking its time
- Russian economy: contraction rates froze in summer
Successful transformation of state-owned enterprises: the case of the Russian Post
Years of public complaints, five hundred tons of delayed parcels and one large scandal in 2013 became the tipping point that made the Russian Post acknowledge the urgent need of strategic change and hire a new CEO in hopes that he can successfully implant corporate practices, honed in Philips and Tele2, into the heart of one of the largest state-owned employers in Russia. This move has proven to be extraordinarily rewarding: Dmitry Strashnov in just two years conducted a complete overhaul of nationwide operations of the Russian Post. As a result of his efforts, the speed of deliveries increased six times, and for the first time in 10 years the company was in the black for the financial year of 2014.
Protecting Russia from oil price swings: the tale of the flexible ruble
The free-floating ruble helped keep Russian economy in a reasonable shape through offsetting most of the negative effect from the oil price fall. The oil industry benefited from a weaker ruble as its ruble-based costs decreased in hard currency terms while the revenues were mostly unaffected, being generally composed of hard currency payments. Federal budget tax collections in ruble terms were only slightly down given that the oil price decline in ruble terms was much smaller than in USD terms. The overall economic impact of the oil price decline was softened through adjustment in imports. Finally, the side effects of the ruble weakening have been manageable.
The Russian retailers: adjusting to their consumers’ new money-saving habits
The economic downturn was thoroughly felt by the Russian consumer due to rising inflation, particularly for imported foods, import ban on several food categories, low income growth. Facing changes in consumer behaviour, the more flexible retailers responded by adjusting product mix in favour of low quality products, and focusing on convenience stores over supermarkets. Some retailers will have to fold or freeze their plans for development, whilst the more efficient retailers will keep to the original plans to win new customers and increase their market share.
Inflation is taking its time
After several months of a steady slowdown in inflation, the headline figure hovered around the same level in July-September and there was even a small increase. Ruble devaluation In July-August resulted in acceleration of price growth in the non-food segment while in the food segment deceleration of inflation continued. This was quite a contrast to the end of last year-beginning of this year when the strongest acceleration in response of ruble devaluation was seen in food prices.
Russian economy: contraction rates froze in summer
In the summer the decline rates for most of the key macroeconomic indicators stabilised roughly at the levels reached in the end of spring. At the same time, industrial production dynamics demonstrated an ongoing improvement largely due to extraction of natural resources.