Dynamics of the Dollar/Euro Exchange Rate on the International Markets 1.1.1.1.1.1.In the period between October 1 and October 28, the exchange rate of Euro on the world market appreciated by US $ 0.012 (by 0.97 per cent) and made US $ 1.2139 per Euro. Similar dynamics were roubles 01.09.16.09.01.10.16.10.31.10.15.11.30.11.15.12.30.12.14.01.29.01.13.02.28.02.15.03.30.03.14.04.29.04.14.05.29.05.13.06.28.06.13.07.28.07.12.08.27.08.11.09.26.09.11.10.26.10.USD/EURO 01.09.01.10.31.10.30.11.30.12.29.01.28.02.30.03.29.04.29.05.28.06.28.07.27.08.26.09.26.10.observed with respect to the exchange rate of the Euro against the Ruble. In the period from October and October 28, the European currency appreciated against the Ruble by RUR 0.16 (by 0.47 per cent) from RUR 34.31 per Euro to RUR 34.47 per Euro. The aggregate turnover of trade at the SELT amounted to Euro 296.04 million in the period from October 3 till October 27, while the average daily turnover was registered at about Euro 16.45 million (Euro 299.58 million and Euro 17.62 million respectively in September). These indicators practically did not change and remained at their respective levels observed in September of this year. Over this period, the highest volume of trade with Euro was registered on October 5 at Euro 26.45 million, and the lowest, Euro 10.55 million, was observed on October 17.
Table 2.
Financial Markets Indicators Month June July August September October* Monthly inflation rate 0,6% 0,3% -0,1% 0,3% 0,5% Inflation rate annualized on the basis of this 7,44% 3,66% -1,19% 3,66% 6,2% month's trend CB RF refinancing rate 13% 13% 13% 13% 13% Annualized yield to maturity on OFZ issues (%) 7,19% 6,89% 7,03% 6,60% 6,7% Volume of trading in the secondary GKO-OFZ 21,03 22,97 49,09 54,13 33,market for the month (RUR billion) Yield to maturity on Minfin bonds at the end of the month (% p.a.) 5th tranche 5,10% 5,16% 4,96% 4,89% 5,4% 6th tranche 4,11% 4,28% 4,13% 4,40% 4,9% 7th tranche 5,51% 5,47% 5,24% 5,13% 5,7% 8th tranche 4,39% 4,51% 4,33% 4,14% 4,8% Yield to maturity of Eurobonds at the end of the month (% p.a.) 2005 4,49% 4,61% 4,55% 4,54% 5,0% 2007 5,38% 4,64% 4,69% 4,57% 5,1% 2010 5,68% 5,69% 5,52% 5,28% 5,9% 2018 6,25% 6,24% 5,96% 5,74% 6,2% 2028 5,48% 5,49% 5,35% 5,16% 5,7% 2030 7,53% 4,56% 5,26% 2,61% 12,13% INSTAR-MIACR rate (% p.a.) on interbank 28,6721 28,6341 28,5450 28,4989 28,overnight loans at the end of the month Official RUR / US$ exchange rate at the end of 34,5241 34,7160 34,8763 34,3811 34,the month Official RUR / Euro exchange rate at the end of 2,07% -0,13% -0,31% -0,16% -0,26% the month Average annualized growth in RUR / US$ ex- -1,91% 0,46% 0,56% -1,42% -0,43% change rate Average annualized growth in RUR / Euro ex- 435,69 594,10 942,81 1197,60 1045,change rate Volume of trading at the stock market in the 707,52 783,98 882,40 1007,76 934,RTS for the month (US$ million) Value of RTS-1 Index at the end of the month 4,90% 10,81% 12,55% 14,21% -7,22% * Estimate D. Polevoy The Real Sector of the Economy: Major Factors and Trends According to preliminary data, in January through September of 2005 GDP made Rub. 15275 billion and was by 5.9 per cent above the level registered in the respective period of the preceding year.
The increase in industrial output made 4.0 per cent, construction works - 8.3 per cent, freight turnover - 2.4 per cent in January through September of 2005. Over the same period the retail trade turnover grew by 11.7 per cent in comparison with the figures observed in the respective period of the preceding year, while the amount of paid household services increased by 7 per cent and investment in fixed assets increased by 9.9 per cent.
The calculation of forecast values of macroeconomic indicators until end-2005, carried out by IET, demonstrates that the expected growth in GDP will make 105.7 per cent by the end of the year, while investment in fixed assets and industrial output will be at 109.9 per cent and 104.6 per cent as compared with the figures registered in the preceding year.
According to the preliminary data presented by the RF Ministry of Economic Development and Trade, in January through September of 2005 the increase in GDP made Rub. 15275 billion and increased by 5.9 per cent as compared with 7.4 per cent registered in the respective period of the preceding year.
Indicators of external and domestic demand remained the major factors determining the dynamics and structure of GDP. Due to the extremely favorable external business situation the deceleration of the rates of external demand to 7.3 per cent as compared with 11.8 per cent registered in January through September of 2004 was primarily determined by the decline in the volumes of oil exports by 1.6 per cent observed this year. The expansion of domestic demand had the dominating effect on the structure and dynamics of economic growth. The increase in domestic demand observed in the 1st quarter of 2005 made 8.2 per cent, and in the 2nd and 3rd quarters grew further to 10.9 per cent and 9.per cent respectively. It should be stressed that the acceleration of the rates of domestic demand as broken down by quarters was supported by positive dynamics of both domestic production and imports. This year, a specific feature was the increase in the rates of growth in domestic production from 4.6 per cent in the 1st quarter to 6.3 per cent in the 3rd quarter. It should be noted that the formation of this trend occurred at the background of falling rates of increase in imports observed in January through September of 2005 to 17.1 per cent, what was by 5.9 p. p. below the figures registered in the respective period of the preceding year. As a result, in the structure of sources of satisfaction of domestic demand there was observed a gradual increase in the share of domestic production from 32 per cent in the second six months of 2004 to 48 per cent in the 1st quarter and 51.1 per cent in the 3rd quarter of 2005.
1st quarter 2nd quarter 3rd quarter 4 st quarter 1st quarter 2nd quarter 3rd quarter 2004 ВВП-производство Внутренний спрос Внешний спрос Figure 1. Changes in GDP dynamics across the components of domestic and external demand in 2004 through 2005 in % of the figures registered in the respective quarter of the preceding year In 2005, across practically all types of economic activities there was observed lower intensity of growth. The increase in the industrial output made 4.0 per cent, what was by 3.4 p. p. below the figures registered in the preceding year. The moderate dynamics of industrial growth was a factor behind a slowdown observed in freight turnover to 2.4 per cent in comparison with 7.1 per cent registered in January through September of 2004. A specific feature of 2005 was the outpacing rates of growth in consumer demand in comparison with the dynamics of investment and external demand. On the whole, in January through September of 2005 the turnover of retail trade increased by 11.7 per cent in comparison with the figures registered in the respective period of the preceding year, while the amount of paid household services grew by 7 per cent and investment in fixed assets increased by 9.9 per cent.
A comparative analysis of the dynamics of production across major types of economic activities demonstrates that the acceleration of the rates of growth in investment in fixed assets and amounts of construction works observed in the 3rd quarter of 2005 was a factor facilitating the enhancement of business activities in industry and the economy at large.
1st quarter 2nd quarter 3rd quarter 1st quarter 2nd quarter 3rd quarter 2004г. 2005г.
Industrial production Freight turnover Amount of construction w orks Retail trade turnover Figure 2. Changes in the rates of growth in production across types of economic activities in through 2005, in per cent of the figures registered in the respective period of the preceding year I II III IV I II III 2004 -Industry Extraction of minerals ископаемых Production and distribution of electrical pow er, natural gas, and w ater Extraction of fuel and energy resources производства Manufacturing industries Figure 3 The rates of growth / decline in industrial output across the types of activities in 2004 and 2005, in per cent of the figures registered in the respective quarter of the preceding year The structural shifts in industry were determined by the outpacing rates of development of manufacturing industries. In January through September of 2005, the increase in the amounts of output of manufacturing industries made 6.1 per cent as compared with a 1.0 per cent growth observed in extracting industries over the same period.
An analysis of the dynamics of extracting industries demonstrates that this year the pertaining positive dynamics of extraction of fuel and energy mineral resources compensated the decline in extraction of metal ores. The positive trend of growth in investment in oil extraction and production drilling (by 32.9 per cent and 7.3 per cent respectively over the 8 months of this year) resulted in the increase of oil extraction by 2.1 per cent in January through September of 2005. As concerns the output of oil products, there was observed a trend towards a significant increase in the volumes of deliveries of crude oil to oil processing plants for primary processing as a result of falling efficiency of exports affected by higher tax burden and growth in transport tariffs. In January through September of 2005, the rates of growth in oil processing made 106.0 per cent as compared with the figures registered in the respective period of 2004, what resulted in the increase in production of gasoline, diesel fuel and furnace oil by 6.1 per cent, 8.7 per cent, and 5.7 per cent respectively.
In January through September of 2005, the extraction of natural gas stabilized at the level registered in the preceding year. The dynamics of natural gas extraction were significantly affected by the absolute decline in the amounts of investments. According to the data presented by the OAO Gazprom, the investment fell by 1.7 per cent in comparison with the level registered in January through August of 2004. At the same time, a more significant decline in investment in extraction was initiated by the shift in priorities of investment activities and the direction of development of the pipeline network.
As concerns manufacturing industries, the deceleration of development of these industries by 2.7 p.
p. in comparison with the figures registered in January through September of 2004 occurred at the background of growing differentiation of the rates of growth in production of consumer and investment goods. In January through September of 2005, the rates of increase in production of food products made 104.7 per cent, while the decline in the output of non-food goods was registered at about 2.per cent. Low activities of the domestic businesses at the background of the outpacing rates of growth in real household incomes, wages, and salaries provoked aggressive imports. According to the data presented by the RF Ministry of Economic Development and Trade, in comparison with the figures registered in January through September of 2004, the increase in import of consumer goods made 23.per cent.
The market of investment goods was supported due to the outpacing rates of import of machinery and equipment (135.2 per cent) in comparison with the dynamics of domestic production and investment in fixed assets. The disproportions in the structure of demand and supply, low competitive power of mechanical engineering industries in terms of quality, consumer qualities, and prices facilitated the trend towards an increase in the share of imported machinery and equipment in the structure of investments. In the present framework of the structure of domestic production of investment goods, imports remain one of the main sources of renewal of fixed assets, reconstruction and modernization of production. In the commodity structure of imports, according to the customs statistical data, the share of machinery and equipment increased from 40.7 per cent to 42.6 per cent in January through September of 2005. The increase in output of machinery and equipment made 6.6 per cent in comparison with the figures registered in January through September of 2004, while output of electrical equipment, electronic and optical equipment, transport vehicles and equipment made 19 per cent and 4.3 per cent respectively. Among the factors positively affecting the dynamics of output, there may be singled out the increase in production of goods under licenses granted by foreign companies using imported completing parts and expansion of consumer crediting. The outpacing rates of growth in output of joint ventures observed at the background of flexible price and sales policies used by dealers of foreign companies changes the terms of competition. This year, domestic motor industries reacted to this situation especially sharply.
This year, the stable expansion of final consumption on the part of households was determined by a gradual improvement of the social parameters of economic development. In January through September of 2005, the increase in real household incomes made 9.3 per cent in comparison with the figures registered in the respective period of the preceding year, while real wages, salaries, and real gross pensions increased by 8.7 per cent and 8.1 per cent respectively. According to the IET calculations, on the whole in 2005 the increase in real household incomes should make 8.5 per cent, while real wages and salaries should grew by 10.1 per cent.
Table 1.
Structure of GDP formation by revenues in 2004 through 2005, in per cent of the quarterly totals 2003 2004 Quarters I II III IV I II III IV I II III Gross domestic product 100 100 100 100 100 100 100 100 100 100 including:
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