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Press review: Russia buckles up for bumpy economy and coronavirus to slow global growth

Top stories in the Russian press on Thursday, March 12

Izvestia: Russian economy fastens seat belt to ride out economic turbulence

Russia’s Central Bank and government have sufficient tools and resources to maintain stability amid macroeconomic uncertainty, Russian President Vladimir Putin said at a recent meeting with investors. He stressed that the authorities were determined to create favorable conditions, which would ensure the safety of investments and minimize the risks.

The spread of the novel coronavirus dealt a major blow to the world economy. According to UN forecasts, global losses caused by the COVID-19 outbreak could amount to $2 trillion this year. Amid the ongoing epidemiological crisis, Vienna hosted an OPEC meeting on March 6. The participants failed to agree on the terms of the deal to cut production, which will cease to be valid on April 1. That has had an adverse effect on international currency markets, sparking a rise in the dollar and euro exchange rates.

"Russia is a country whose economy continues to be largely dependent on energy resources. These are both oil and natural gas. Although the demand for gas has dropped due to warm winters, it is still fairly high. That is why the Americans are making every effort to twist the arms of Western companies involved in the construction of Nord Stream 2," Azhdar Kurtov, an expert at the Russian Institute for Strategic Studies (RISS), told Izvestia.

The latest statistics indicates that the coronavirus situation in China is stabilizing, he went on to say. "That means that China’s industry, which stopped during the quarantine period, will resume work soon. The demand for energy products, including oil, will grow, and that will result in an increase in the price of that product," the expert explained.


Nezavisimaya Gazeta: Falling oil prices raise Trump’s chances of being re-elected

Washington views Moscow’s withdrawal from the OPEC+ deal as an assault on America’s shale industry, Nezavisimaya Gazeta writes. According to some US analysts, the collapse of the deal is not only part of a fight for the market share but also Moscow’s revenge against Washington for its anti-Russian sanctions, including those related to the Russian energy sector.

Some news commentators do not rule out that a drop in fuel prices would boost US President Donald Trump in the run-up to the presidential election. "The fall in oil prices increases his chances of being re-elected," the paper quotes Sergei Suverov, a senior analyst at BCS Premier, as saying.

The United States is a unique player in the global oil market to a certain extent. Until recently, Washington was a major net oil importer, but now the situation has changed due to an increase in production and exports. Exports and imports of crude oil are currently almost balanced. That means that the US economy in general will react neutrally to any changes in oil prices, says Alpari Senior Research Analyst Vadim Iosub.

"Of course, lower prices will be a blow for hard-to-recover oil producers. On the other hand, it will be a boon to oil consumers," he added. The latter factor can play into Trump’s hands.

The US economy has already sustained losses because of falling oil prices, recalls Head of AMarkets Analytical Department Artem Deev. "On March 9, the shares of leading oil producers in the United States plummeted. The fact is that threats to the shale industry are growing during the election campaign and this cannot be a positive factor for the incumbent president’s administration," he said


Izvestia: Coronavirus pandemic brings global crisis nearer

Stock markets will have to brace for "Black Thursday," while global economic growth could slow to roughly 1% due to the global coronavirus pandemic declared by the World Health Organization (WHO), experts interviewed by Izvestia said. Epidemiologists suggest that the spread of the virus will continue at least until this coming summer.

"The grounds for declaring a pandemic is globality. If everyone in China contracted the virus, that would be considered a regional case," explained Pavel Volchkov, who heads the Genome Engineering Laboratory at the Moscow Institute of Physics and Technology.

One of the standards for declaring a pandemic is the absence of a vaccine against the disease, so it could be in effect until such a vaccine is developed. For example, the atypical pneumonia pandemic lasted seven months, Galina Kozhevnikova, Head of the Infectious Diseases Department at the People’s Friendship University, stressed. "In Russia, very tough restrictions have been put in place right from the start, that is why we have isolated [coronavirus] cases unlike other countries," she noted.

According to Alexander Lukashev, director of the Institute of Medical Parasitology, Tropical and Vector-borne Diseases at Sechenov University, the WHO put off the decision to declare the coronavirus a pandemic for a long time. "It was clear as early as February 25 that a pandemic was inevitable. That was evidenced by the degree of the virus’ spread, the growing number of confirmed cases, the lack of measures to prevent the epidemic, which some countries, for example, Italy, began to take only two days ago," he stressed.

The announcement of the pandemic is capable of slowing the growth of global economy to a level close to 1%, says BCS Premier's Anton Pokatovich.

Amid the COVID-19 crisis, Russia’s GDP can grow 1.5-1.7% instead of the expected 2%, warns Alexander Shirov, deputy director of the Institute for Economic Forecasting at the Russian Academy of Sciences.


Nezavisimaya Gazeta: Nazarbayev shares political longevity experience with Putin

Kazakhstan’s former President Nursultan Nazarbayev has paid a visit to Moscow, which seemed rather spontaneous, Nezavisimaya Gazeta writes.

Deputy Chairman of the Russian Security Council Dmitry Medvedev earlier travelled to Nur-Sultan to discuss constitutional reform in Russia and the political processes in Kazakhstan with President Kassym-Jomart Tokayev. The very next day, Nazarbayev had a phone call with Russian President Vladimir Putin and "discussed a schedule of personal meetings" with him. It's probably that the former Kazakh president needed to have a face-to-face meeting with the Russian leader.

"Kazakhstan is a political time machine for Russia. There was every reason to believe that the techniques and political strategies on Constitutional reform and on the creation of the leader’s institution would be borrowed and implemented in Russia," Yuri Solozobov, Director of International Projects at Russia’s National Strategy Institute, told the paper.

Nazarbayev clinched a landslide victory in Kazakhstan’s 1999 presidential election. Later on, in accordance with the 2007 amendments, an exception was made for Nazarbayev, allowing him to be elected an unlimited number of times as president and make a substantial contribution to the country’s development. "Most importantly, constitutional reform was discussed in Kazakhstan in 2017. It was presumed that this experience would be used in Russia and that restrictions on presidential terms for Vladimir Putin as a person who made a special contribution to the country’s development would be lifted," the expert said.


Vedomosti: Gazprom’s export revenues down by more than 40% in January

Russian energy giant Gazprom experienced a 41.1-percent loss in export revenue in January 2020 compared to the first month of last year, slightly exceeding $3 bln, Vedomosti writes citing data provided by the Federal Customs Service.

Russia’s budget has likewise taken a hit. Gazprom pays an export duty on gas in the amount of 30% of the cost. It turns out that in January 2019, the company paid $1.5 bln, whereas in January 2020, it handed in $900 mln. If export prices have been falling since January, duties will fall alongside them, the paper quotes Alexandra Suslina of the Economic Expert Group as saying. If gas exports drop, in addition to gas prices, losses to the government coffers will be even bigger. That’s very important for the budget, especially now since a deficit is setting in, and any loss will exacerbate it, she noted.

In February, export supplies fell even further, according to Sergey Kapitonov, an analyst at the Skolkovo School of Management. "When Gazprom entered the export supercycle — more than 190 bln cubic meters from 2017 to 2019 — gas supplies in January and February amounted to 33-35 bln cubic meters. The current decline in export volumes is about 20-25%," he explained.

Gazprom is unlikely to set any export records this year, the expert went on to say. "However, there are positive factors too. Low prices will accelerate gas consumption in Europe, if the region does not plunge into hibernation because of the coronavirus," he contended.


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