The amount of Russia’s import exceeded $25 billion ($25.1 billion) first time in April of 2008.
Photo: Alexander Miridonov
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The Import Overheat
The amount of Russia’s import exceeded $25 billion ($25.1 billion) first time in April of 2008. The export was record as well, once the amount surpassed $40 billion ($40.5 billion) first time in the country’s history. The annual rates of import growth set the third record - the pace was 50.2 percent, having passed the milestone of 50 percent.
Without the double growth in crude prices in the last year, this import acceleration would have materially curtailed the balance of trading and current account and triggered drastic changes in economy. But the trading balance shows no signs of reduction. It equaled $15.5 billion in April and was roughly $20 billion in May, according to CBR Deputy Executive Gennady Melikiyan. The May official statistics will be released only in early July.
The import growth is fueled by domestic demand, as the capacities of local manufacturers don’t suffice to meet the consumer demand heated by surge in the income of the nation. They proved equally insufficient for meeting investment demand despite the general slowdown of the latter.
The investments drive up production capacities with a certain lag, and until it is finally covered, the increase in domestic demand is covered either by the import or by the growth in consumption of non-traded goods, services and the prices for them. The aftereffect is that the increase in prices for services is above the consumer price index and the prices for some assets, mostly for real estate, are skyrocketing.
The grand impact of Moscow construction monopoly doesn’t allow to regard the prices for Moscow real estate (a sq meter costs above $5,700, according to IRN) the best example for illustrating soap bubbles of economy overheat, but the prices for real estate in the regions appear quite adequate for this purpose.
www.kommersant.com
All the Article in Russian as of June 11, 2008
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