The impact of Common Economic Space on the economy of Russia, Kazakhstan and Belarus: results and prospects

Transcription

1 The impact of Common Economic Space on the economy of Russia, Kazakhstan and Belarus: results and prospects Rating-Agentur Expert RA GmbH Mainzer Landstrasse 49, 6329 Frankfurt am Main Frankfurt am Main, 214

2 The unequal union: Russia accounts for 88% of the total GDP of 'Common Economic Space' Share in the total GDP of 'Common Economic Space' in 213 9% 3% Russia Kazakhstan Belorussia 88% Source: RAEX according to Federal State Statistics Service, National Statistical Committee of the Republic of Belarus, Agency of Kazakhstan of Statistics 2

3 bln USD 'bln USD 'bln USD Slowdown of the Russian economy is a challenge for other members of CES Russia Kazakhstan Belorussia 25 6% 25 8% % % % 6% 5% % 8% % -6% -8% 1 5 4% 3% 1% % 4% % % % GDP GDP growth GDP GDP growth GDP GDP growth Source: RAEX according to Federal State Statistics Service, National Statistical Committee of the Republic of Belarus, Agency of Kazakhstan of Statistics The slowdown in Russian economic growth has been there for three years Belorussian economy reacts strongly on the slowdown in Russian economy Kazakhstan has growth based on final consumption, with significant domestic economic problems 3

4 % Bln USD % Consumer demand is gradually ceasing to be the driver of growth 25 Dynamics of retail turnover in the CES 9 6 Dynamics of investments in the CES The total turnover of retail trade in the CES, bln USD Belorussia Kazakhstan Russia The total volume of investment in the CEA, bln USD Belorussia Kazakhstan Russia Source: RAEX according to Eurasian Economic Commission Reasons for the slowdown of investment - not only in financial sector, but also institutional in the economy as a whole All countries of CES implement reforms aimed at improving the investment climate 4

5 Consequences of high commodity dependence: reducing trade surplus of Russia and Kazakhstan Trade balance (% of GDP) 25,2 23,9 19,3 18,8 1,7 13,1 15,3 9,2 9,6 1,3 9,6 8,6, ,9-6,3-1,7-14,5-16,9 Belorussia Kazakhstan Russia 47% Structure of import to CES in foreign trade with third countries 8% 13% 7% 1% 6% 16% Structure of export from CES in foreign trade with third countries % 7% 5% 3% 6% 3% 74% Food commodities and raw agricultural products Products of mining industry Chemical products Wood, pulp and paper Textiles and footwear Metals Machinery, equipment and vehicles Others Source: RAEX according to Eurasian Economic Commission External demand within the CES also gradually reduced Structure of export / import of CES shows low competitiveness of CES economies The main problem of Belorussia s foreign trade - currency liquidity shortage 5

6 Lack of long-term funding sources is the main obstacle for economic growth in the CES Structure of capital investments by source of funding, % Balance of direct investment (% of GDP) 1% 9% 8% 7% 6% 5% 4% 3% 1% % 9,3 2,4 14,6 18,5 11,3 46,1 37, ,8 21,2 13,1 16,8 4,5 19,6 Belorussia Kazakhstan Russia,9 Loans from foreign banks and funds from foreign investors Loans from domestic banks Companies' own funds Public funds Others ,5,6,6,7 -, ,1-2,4-2,1-2,5-2,9-3,6-3,6-3,5-4,6-5,8-6,6-8,8-9,8 Belorussia Kazakhstan Russia -12 Source: RAEX according to Eurasian Economic Commission Balance of direct investment is negative or close to zero High share of enterprises' own funds in financing investment projects 6

7 'bln USD % The asset quality of Russian banks will deteriorate as a result of slowdown of economic growth Dynamics of Russian banking sector % 16% 14% 1 1% 8% 6% 4% % Capital adequacy, % % 8% 7% 6% 5% 4% 3% 1% % The share of problem and bad loans in total loans, % Assets of banks, 'bln USD Assets of banks to GDP, % Source: RAEX according to Central Bank of Russian Federation Relatively high level of development of the banking system: аssets of Russian banks to GDP 85% (growth from pp) High capital adequacy (>1) and high profitability level of banks; Moderately high level of overdue loans (3,5% ac. to CBR) The growth of the level of overdue loans (mostly in sector of unsecured consumer credits) 7

8 Mln USD The main risk of the Kazakhstan banking system: high level of overdue debt Dynamics of Kazakhstan banking sector 12 1% 9% 1 8% 8 7% 6% 6 5% 4% 4 3% 2 1% % Assets of other banks Assets of 5 largest banks Assets of banks to GDP, % 35% 3% 25% 15% 1% 5% % Dynamics of bad loans Share of overdue loans (more than 9 days) Share of overdue loans (more than 9 days) (excluding 'BTA Bank' and 'Alliance Bank') Source: RAEX according to National Bank of Kazakhstan Republic The crisis has led to a reduction in the role of the banking sector in the economy Currency devaluation and aggressive credit expansion of banks led to moderately high level of overdue loans The National Bank has introduced limits on consumer lending in February 214 Positive features: moderately high level of capital adequacy (>13%) and high profitability level of banks (ROA = 1.77%) 8

9 Mln USD % Four largest state-owned banks account for 65.7% of total assets of the banking system of Belorussia 5 Dynamics of Belarus banking sector 1% 6 Dynamics of overdue loans in total loans % 8% % 6% % 3 2 4% 15 3% % 1 % Assets of other banks Assets of 5 largest banks Assets of banks to GDP, % Source: RAEX according to National Bank of Belarus Republic Relatively low level of development of the banking system and high level of concentration Acceptable level of stability of the banking system: normal capital adequacy (>14%), high profitability level of banks, acceptable share of overdue loans 9

10 % The effect of removing customs barriers exhausted by 213 Growth of mutual trade in goods between the CES countries Share of mutual trade in foreign trade EEA is small, but highly significant for Belarus ,1 33,9 Russia Kazakhstan ,5 Belorussia ,5 CES % 1% 3% 4% 5% 6% 7% 8% 9% 1% The share of trade with other countries in the total foreign trade The share of trade with CES countries in the total foreign trade Source: RAEX according to Eurasian Economic Commission Harmonization of customs and technical regulation has led to a sharp increase in mutual trade in the period of economy recovery Low share of mutual trade in the total foreign trade of CES CES does not provide to its participants rapid growth of trade with Russia. The share of Belorussia and Kazakhstan in Russia's foreign trade has been steadily declining. Russia's trade with countries outside the Union, develops more active 1

11 Areas of potential increase of the CES effect: Abolition of import/export duty on oil Liberalization of mutual investment regulation Increasing integration of financial markets Closing the gap in the foreign trade barriers Increasing bargaining power with third countries 11

12 Thank you for your attention! Office 61A, Mainzer Landstrasse 49, 6329 Frankfurt am Main Tel ,