Russia’s Economic Slowdown In One Chart

No. Virtually all of Eastern Europe is going through a period of severe economic weakness. Poland, everyones favorite post-communist wunderkind, grew by 1.9% in 2012 and is forecast to grow by as little as 1.1% in 2013. Slovakia, which was also lauded for its determined economic reforms and its export-led growth model, had a similarly poor performance. It grew by 1.8% in 2012 and is forecast to grow by about 1% in 2013. So, even in its currently weakened state, Russias economy is actually performing better than those of many other countries in the region. Nonetheless, continued stagnation of industrial production will eventually become a pretty serious problem. Oil prices arent going to increase forever, and even if Russia never become an export powerhouse if it wants to play an important international role it cannot have an industrial sector that is permanently frozen in early 2012. The Russian government has actually been following a very prudent and inflation-adverse monetary policy, but it has shown almost no interest in the sort of supply-side reforms that would spur investment and, eventually, improvements in productivity and production. It can, of course, continue to eschew those reforms, but if it does so then it should expect to see more of the same uninspiring performance. Russia always seems to draw out extremely heated opinions: the country is either imploding or poised to take over Europe . The reality is usually a lot more boring. But while the stagnation of Russias industrial production isnt the worst thing ever it is, even in a relatively optimistic analysis such as my 0wn, a big deal.

VTB to sell Tele2 Russia stake, fuelling consolidation talk

Cars drive past an office of VTB bank in Moscow, April 29, 2013. REUTERS/Sergei Karpukhin

Russia’s mobile market is dominated by three companies – MTS (MBT.N), Megafon (MFON.MM) and Vimpelcom (VIP.O). Smaller players have little room to grow client numbers as many Russians already own more than one SIM card, fuelling speculation they will consolidate to step up the challenge to the “Big Three”. “I think this is just the first part of a deal, and the next step is likely to see Rostelecom join its (mobile) assets with Tele2 and get a stake in the united company,” said Anna Lepetukhina at Sberbank Investment Research. Yuri Soloviev, first deputy president of VTB’s management board, said on Friday that VTB would sell 50 percent of Tele2 Russia to a group of investors, including affiliates of Bank Rossiya and Alexei Mordashov’s steelmaker Severstal (CHMF.MM). The deal represents a quick turnaround for VTB, which bought industry No. 4 Tele2 Russia in April for $3.6 billion from Sweden’s Tele2 (TEL2b.ST). VTB had said it was not looking to hold the asset for the long term. The deal could be worth about $2 billion including debt, according to the valuation VTB gave for Tele2 Russia in its last financial report. That valuation – as of the end of June – showed the asset rose around 20 percent in value in the first three months of ownership. VTB declined to comment on the price. A tie-up between Tele2 Russia and the mobile arm of state-controlled Rostelecom (RTKM.MM) – the country’s fifth largest mobile operator – has long been speculated.

Russia beats Luxembourg, stays on track for WCup

Portugal could still pull level with Russia in next week’s last qualifiers but the Russians have scored seven more goals than the Portuguese, giving them the decisive edge. The draw in Lisbon ensured Portugal at least a place in the playoff between the best eight second-place teams in the nine European qualifying groups. Bulgaria’s 2-1 defeat against Armenia in Group B meant Portugal has enough points for a playoff berth. Russia powered past Luxembourg with first-half goals from Alexander Samedov, Victor Faizulin and Denis Glushakov. Alexander Kerzhakov got another in the 73rd. “We have played a very good match, on high speed and with great desire,” Russia coach Fabio Capello said. “We’ve reached our goal.” Portugal, a 2012 European Championship semifinalist, failed to impress against Israel in what has been a lackluster qualifying campaign, with Cristiano Ronaldo producing a muted performance in the Portuguese capital. A blunder by goalkeeper Rui Patricio cost Portugal victory as his 85th-minute clearance went straight to Ben Basat, who canceled out Ricardo Costa’s 27th-minute strike. The game was tense to the end as a below-par Portuguese team held onto its slender lead. Portugal’s qualification bid went off track earlier in the campaign with a 1-1 home draw against Northern Ireland and a 3-3- draw in Israel, and Friday’s lukewarm match was reminiscent of those displays. The Portuguese defense was depleted by the absence of three regular starters, but its attack was the weakest point and the team struggled to find its rhythm going forward. More Soccer