Russia's economy continues to reel as energy revenue and the ruble weaken

  The country's energy revenues tumbled 45% year over year to $19.6 billion as crude prices declined and gas exports sank ...

Phil Rosen

Wed, April 12, 2023 at 5:19 AM GMT+8·2 min read

Russian President Vladimir Putin.Mikhail Klimentyev/AP

• Russia's oil and gas revenue tumbled by 45% in the first three months of 2023 amid sanctions.

• Meanwhile, the ruble is coming off its worst week against the dollar in a year.

• A recent paper said Russia's recession in 2022 was actually twice as bad as official data implied.

As Moscow navigates its second year of its war on Ukraine, the Russian economy continues to stumble with plunging oil and gas export revenues and a weakening currency.

Through the first quarter of 2023, the country's energy revenues tumbled 45% year over year to $19.6 billion as crude prices declined and gas exports sank.

Russia is still shipping out crude and fuel products, but the data suggest the price cap imposed by the US and its allies is having the intended dual-effect of curtailing revenue while keeping products flowing through the market.

Experts previously forecasted that sanctions targeting Russian energy wouldn't spur serious repercussions in overall production volume. Other nations including China and India could still buoy demand, analysts said, and Russian supplies could find a way bypass restrictions and still end up in Europe.

Yet the nation's seaborne exports collapsed in the first week of April, with Bloomberg data showing flows from Russian ports dropped by 1.24 million barrels a day — the steepest weekly decline since mid-December.

Alongside the drop in energy revenue, spending surged 34% to $99 billion as the costs to wage war on Ukraine pile up. That led to a $29 billion first-quarter budget deficit, reversing sharply from a year-ago surplus of $14 billion.

Meanwhile, the ruble is coming off its worst week against the dollar since April 2022, falling more than 5% by Friday.

The deterioration at the start of 2023 follows indications that Russia's recession in 2022 was much worse than official data showed.

Stripping away military spending from GDP figures, the country saw a downturn twice as bad as domestic figures imply, wrote Adrian Schmith and Hanna Sakhno a paper for the Centre for Economic Policy and Research in February.

"[The data] currently points to a further loss of momentum driven by stagnating real estate prices and lower business activity in recent months, which is not yet fully reflected in the official data releases," the authors wrote.

That adds to bleak views about the Russian economy as war and sanctions weigh on its long-term prospects.

Economist Konstantin Sonin said Russia faces the same fate of the Soviet Union.

"Everything that is happening makes the Russian economy more primitive, more backwards," he told Russian news outlet Novaya Gazeta. "This makes backwardness and primitivism more persistent."

Read the original article on Business Insider

https://finance.yahoo.com/news/russias-economy-continues-reel-energy-211945356.html

The time of ‘peak SNP’ is almost over - Chopper's Politics

5th April 2023

By Christopher 'Chopper' Hope ASSOCIATE EDITOR (POLITICS) The Telegraph

Afternoon, Today is “law and order day” in politics - just not in the normal way. Just as Britons were waking up to the sight of Donald Trump being charged with 34 offences in the USA, officers from Police Scotland were raiding the home of Nicola Sturgeon and Peter Murrell following an investigation into the SNP’s finances. Politics is getting wilder and wilder. It used to be just the fringe parties who would try to get the police involved in their affairs, a sign I always thought of their immaturity. But it is startling to see police involved in the workings of the SNP and Republican Party. The raids in Scotland are of a different magnitude to the Metropolitan Police questionnaires and the “speeding fine”- type sanctions handed out to Boris Johnson and Rishi Sunak over “partygate” breaches of lockdown rules. At the time of writing, Murrell’s Glasgow home had been sealed off by detectives while police have also carried out a search at the SNP’s headquarters in Edinburgh. The BBC reported that there are “10 uniformed officers stationed outside the former first minister’s home, alongside one police vehicle and an incident tent in the front garden”. Police have been investigating the SNP’s finances after receiving complaints about how more than £600,000 of donations were used. Sturgeon as leader had insisted that she was “not concerned” about the party’s finances. The political damage of today’s events to new SNP leader Humza Yousaf, who this time last week was taking over as First Minister, and the Scottish government is only just registering. The question now is who will benefit? A poll in Scotland yesterday found that it is Labour and the Liberal Democrats, rather than the Conservatives, who had picked up support from the unedifying attacks by the candidates on each other in the SNP leadership campaign. The poll from Redfield and Wilton found SNP support has slipped three per cent to 36 per cent, while Labour were up two per cent to 31 per cent. The Liberal Democrats up four per cent to 10 per cent. The Tories were down three per cent to 19 per cent. Wait until today’s events filter through to the polls. The police investigation will take its course over the next few months. But certainly it seems to me that the time of “peak SNP” is well and truly receding in the rear view mirror. Labour and to a lesser extent the Tories will be licking their lips as they eye up the party’s seats at next year’s general election, as Labour’s Scottish leader Anas Sarwar told me on my podcast last week. There will be everything to play for. Politics has never felt more unpredictable. And the dull leaders in charge of the main UK parties - Sir Keir Starmer, Sir Ed Davey and to a lesser extent, Rishi Sunak - will benefit. Cheerio! Chopper

Scotland's financial projections have 'deteriorated significantly' due to changes in oil and gas prices - IFS

 Scotland’s financial deficit could be around £1,300 per person higher than the UK due to significant deteriorations in its fiscal outlook due to the impact of falling oil and gas prices, a think tank has warned.

Story by Conor Matchett

3 April 2023

Scotland's financial projections have 'deteriorated significantly' due to changes in oil and gas prices - IFS© The oil platform Stena Spey amongst other rigs in the Cromarty Firth near Invergordon in the Highlands of Scotland.

Lower prices, while good news as a whole, has led to Scotland’s financial projections having “deteriorated significantly”, the Institute for Fiscal Studies has said.

This means that the November forecasts where the underlying budget deficit of Scotland for the 2023/25 financial year appeared to be lower than the rest of the UK had reversed.

Critics said the implications were “very concerning” and underlined how the Scottish Government had allegedly “mismanaged” the economy.

The latest forecast from the Office for Budget Responsibility (OBR) predict the UK’s oil and gas revenues will hit £11 billion in 2022/23 and just over £10 billion the following financial year, a marked decrease from its forecast last November which expected revenues to reach £15 billion then almost £21 billion respectively.

The IFS said this has a particularly detrimental impact in Scotland since most of the UK’s oil and gas revenues are generated from activity in Scottish waters.

The think tank said November’s forecasts implied Scotland’s underlying budget deficit for 2023/24 might be lower than that of the UK as a whole for the first time in more than a decade but the latest forecasts suggest Scotland’s deficit could be close to £1,300 higher per person than that of the UK as a whole.

David Phillips, IFS associate director said: “The fall in forecast oil, and particularly gas, prices since last autumn is welcome news for households, business and the public finances of the UK as a whole.

“However, the fact that the vast majority of the UK’s oil and gas revenues are from taxing activities in Scottish waters means that Scotland’s underlying public finances will improve by a lot less in the coming year than previously expected: lower prices mean lower revenues.

“As a result, the underlying Scottish budget deficit now looks set to remain significantly higher than that of the UK as a whole this year and next, in contrast to what we thought last autumn.

“This highlights just how significant volatile oil and gas revenues are in a Scottish context.

“In addition, this gap between Scotland’s deficit and that of the rest of the UK will grow further in the longer term as oil and gas production in the North Sea slowly declines, unless new revenue-rich sources of economic growth for Scotland can be found.”

Finance spokesperson for the Scottish Conservatives, Liz Smith, said the figures were “very concerning”.

She said: “The SNP Government has presided over more sluggish growth, and a higher fiscal deficit, than the rest of the UK for a decade. That position will only get worse with a reduction in revenue from the oil and gas sector – to which the SNP and their Green coalition partners have shown such hostility.

“The latest forecasts underline just how woefully they have mismanaged the Scottish economy and blow a hole in their budget for the coming year. Scotland desperately needs economic growth, but that’s been neglected while the Nationalists pursue their constitutional obsession.

“Now our fiscal deficit is set to be worse than the rest of the UK’s by around £1,300 per person – a shocking indictment of the SNP’s fiscal ineptitude.”

Scottish Labour’s Colin Smyth said the SNP had failed to make Scotland’s energy resources “work for our economy”.

He said: “Scotland’s potential for renewable energy still sits untapped. Too often the benefits in the sector go straight to companies owned overseas and we have little to show by way of supply chain jobs.

"To truly unleash our energy potential, we need a publicly owned, clean energy company that will properly invest in renewables and deliver the jobs in Scotland. Only Labour can deliver this and put the profits back in the pockets of ordinary Scots."

The Scottish Government has been contacted for comment.

https://www.msn.com/en-gb/money/other/scotland-s-financial-projections-have-deteriorated-significantly-due-to-changes-in-oil-and-gas-prices-ifs/ar-AA19qceK