For the second time in less than a decade, Elvira Nabiullina is steering Russia’s economy through treacherous waters.
In 2014, facing a collapsing ruble and soaring inflation after barely a year as head of the Central Bank of Russia, Ms. Nabiullina forced the institution into the modern era of economic policymaking by sharply raising interest rates. The politically risky move slowed the economy, tamed soaring prices and won her an international reputation as a tough decision maker.
In the world of central bankers, among technocrats tasked with keeping prices under control and financial systems stable, Ms. Nabiullina became a rising star for using orthodox policies to manage an unruly economy often tethered to the price of oil. In 2015, she was named Central Bank Governor of the Year by Euromoney magazine. Three years later, Christine Lagarde, then the head of the International Monetary Fund, effused that Ms. Nabiullina could make “central banking sing.”
Now it falls to Ms. Nabiullina to steer Russia’s economy through a deep recession, and to keep its financial system, cut off from much of the rest of the world, intact. The challenge follows years she spent strengthening Russia’s financial defenses against the kind of powerful sanctions that have been wielded in response to President Vladimir V. Putin’s geopolitical aggression.
She has guided the extraordinary rebound of Russia’s currency, which lost a quarter of its value within days of the Feb. 24 invasion of Ukraine. The central bank took aggressive measures to stop large sums of money from leaving the country, arresting a panic in markets and halting a potential run on the banking system.
In late April, Russia’s Parliament confirmed Ms. Nabiullina, 58, for five more years as chairwoman after Mr. Putin nominated her to serve a third term.
“She’s an important beacon of stability for Russia’s financial system,” said Elina Ribakova, the deputy chief economist of the Institute of International Finance, an industry group in Washington. “Her reappointment has symbolic value.”
Prescribing a tough remedy
In her last crisis, she turned a catastrophe into an opportunity. In 2014, Russia was rocked by twin economic shocks: a collapse in oil prices — caused by a jump in U.S. production and the refusal of Saudi Arabia to cut production, denting Russia’s oil revenue — and economic sanctions imposed after Russia annexed Crimea.
The ruble plummeted. Ms. Nabiullina abandoned traditional policies — such as spending vast amounts of foreign currency reserves to support the exchange rate — and turned the bank’s focus to managing inflation. She raised interest rates to 17 percent, and they stayed relatively high for years.
It was a painful readjustment, and the economy shrank for a year and a half. But by mid-2017, she had managed something that had seemed far-fetched just a few years earlier: The inflation rate fell below 4 percent, the lowest in the country’s post-Soviet era.
“She’s been the very model of a modern central banker,” said Richard Portes, a professor of economics at London Business School who has shared panel stages with Ms. Nabiullina at conferences.
“She was doing what she had to do,” he said, even when it was politically difficult. “If you want a demonstration of the alternative,” Mr. Portes added, “you need look only at Turkey,” where years of political interference in the central bank have allowed inflation to run out of control, reaching 70 percent this month.
Under Ms. Nabiullina’s direction, the central bank kept up its modernizing efforts. It improved its communication by scheduling key policy decisions, providing guidance about policy, meeting with analysts and submitting to interviews with reporters. The Central Bank of Russia came to be regarded as the key economic brain of the country, attracting respected economists from the private sector.
At its annual conference in St. Petersburg, the central bank drew economists from around the world, and Ms. Nabiullina attended international gatherings, including the Federal Reserve’s annual symposium at Jackson Hole in Wyoming and regular meetings for central bankers held by the Bank for International Settlements in Basel, Switzerland.
She has been described as personable, focused, always well-prepared, an advocate of market forces (despite her Soviet-era economics education) and a fan of history and opera. Born in Ufa, a city more than 700 miles east of Moscow known for heavy industry, she studied at Moscow State University, one of the country’s most prestigious schools, and is married to a fellow economist.
Cleaning up the banks
Besides her record on monetary policy, Ms. Nabiullina has drawn praise for pursuing a thorough cleanup of the banking industry. In her first five years at the bank, she revoked about 400 banking licenses — essentially closing a third of Russia’s banks — in an effort to cull weak institutions that were making what she termed “dubious transactions.”
It was considered a brave crusade: In 2006, a central bank official who had started a vigorous campaign to close banks suspected of money laundering was assassinated.
“Fighting corruption in the banking sector is a job for very courageous people,” said Sergei Guriev, a Russian economist who left the country in 2013 and is now a professor at Sciences Po in Paris. He called her program flawed, though, because it was largely limited to private banks. This created a moral hazard problem that left state-owned banks feeling comfortable taking on lots of risk with the protection of the government, he said.
Ms. Nabiullina’s integrity has never been questioned, added Mr. Guriev, who said he had known her for 15 years. “She’s never been suspected of any corruption.”
Building a fortress
Ms. Nabiullina has been a high-ranking official in Mr. Putin’s regime for two decades. She was his chief economic adviser for little more than a year before she was made chair of the central bank in June 2013, having already served as minister for economic development while Mr. Putin was prime minister.
“She’s well-trusted in the government and by the president,” said Sofya Donets, an economist at Renaissance Capital in Moscow who worked at the central bank from 2007 to 2019. In recent years, it was quite evident that all kinds of policy questions in the financial sphere were delegated to the central bank, she added.
This trust was built up while Ms. Nabiullina was buttressing Russia’s economy against Western sanctions, especially from the long reach of American penalties. In 2014, the United States cut off many major Russian companies from its capital markets. But these companies had large amounts of foreign currency debt, raising alarms over how they would service their debts.
Ms. Nabiullina set about squeezing as many U.S. dollars from the economy as possible, so that companies and banks would be less vulnerable if Washington further restricted access to the country’s use of dollars.
She also shifted the bank’s reserves, which grew to be worth more than $600 billion, toward gold, the euro and the Chinese renminbi. Over her tenure, the share of dollars in the reserves fell to about 11 percent, from more than 40 percent, Ms. Nabiullina told Parliament last month. Even after sanctions froze the bank’s overseas reserves, the country has “sufficient” reserves in gold and renminbi, she told lawmakers.
Other protections against sanctions included an alternative to SWIFT, the global banking messaging system, developed in recent years. And the bank changed the payments infrastructure to process credit card transactions in the country so even the exit of Visa and Mastercard would have minimal effect.
In March, Bloomberg News and The Wall Street Journal, citing unidentified sources, reported that Ms. Nabiullina had tried to resign after the Ukraine invasion, and had been rebuffed by Mr. Putin. The central bank rejected those reports.
Last month, the Canadian government placed her under sanctions for being a “close associate of the Russian regime.”
Mr. Guriev, who has not been in recent contact with Ms. Nabiullina, said he thought she might be staying in her role because she could convince herself that if she stepped down, inflation would get out of control and ordinary Russians would be hurt more severely.
“However, I think that she is actually propping up Putin’s war economy,” he added. “She is actually doing something that she didn’t sign up for.”
A war economy
After Ms. Nabiullina spent nearly a decade building a reputation for subduing inflation and bringing traditional monetary policy to Russia, the Western financial penalties imposed after the Ukraine invasion quickly forced her to abandon her preferred policies. She more than doubled the interest rate, to 20 percent; used capital controls to severely restrict the flow of money out of the country; shut down stock trading on the Moscow Exchange; and loosened regulations on banks so lending didn’t seize up.
These measures stopped the initial panic and helped the ruble rebound, but the capital controls have only been partly lifted.
Now Russia is entering into a steep recession with a closed economy. On April 29, the bank lowered the interest rate to 14 percent, a sign it was shifting from quelling a financial tornado to trying to minimize the prolonged impact of sanctions on households and businesses as inflation speeds up and companies are forced to reinvent their supply chains without imported goods.
Inflation has climbed steeply, and could reach an annual rate of 23 percent this year, the central bank forecast. The overall economy, it said, could shrink as much as 10 percent.
“We are in a zone of enormous uncertainty,” Ms. Nabiullina said.
Liz Alderman contributed reporting.
Rural development grants to spark Nicola Valley economy – Global News
The province announced on Friday a series of rural development grants in the Nicola Valley to support economic development and diversification.
This is the next step in the StrongerBC Economic Plan and the ongoing recovery efforts in Merritt following the floods in November last year.
“People in Merritt have been through a lot in the past year, and they know how important business recovery is for community rebuilding,” said parliamentary secretary for rural and regional development Roly Russell in a press release.
The provincial government is providing a $1-million rural development grant to the Small-Scale Meat Producers Association to build a community abattoir in the Merritt area.
This will provide meat processing and cut-and-wrap services to local farmers and ranchers.
“This project represents significant job and economic opportunities for the region, while ensuring local ranches, abattoirs and businesses are part of a strong, resilient B.C. food system,” said minister of agriculture and food Lana Popham in a press release.
“With the recent changes to B.C.’s meat-licensing system and investments in facilities like the Nicola Valley community abattoir, this revitalization of the small-scale meat industry makes it easier to produce, buy and sell B.C. meat in our rural communities, and helps strengthen our food security and food resiliency.”
The abattoir will be a government-inspected licensed facility with a full range of services to process red meat.
According to the province, local producers have been impacted by the lack of processing capacity. Julia Smith who is a pork and beef producer in Merrit is hopeful this new facility will help her business as well as other local producers.
“My partner and I moved to the Nicola Valley in 2016 planning to expand our business to meet the growing demand for well-raised, local meat. But we soon found that the processors we relied upon were not able to keep up with our production and we had to scale the business back instead of growing it.”
More than 900 people still displaced following Merritt flooding last fall
“We were on the verge of giving up. But now we are ready to press on, because this facility will allow us, and other local family farms and ranches, to grow and thrive while providing greater food security for the community.”
The province is providing a $1-million rural development grant to the Scw’exmx Tribal Council toward Gateway 286 in Merritt.
“After an unbelievable year of fires, floods, and a pandemic, we welcome the B.C. government’s $1-million grant that will bolster our rural community, support good-paying jobs and much-needed economic development,” said Spayum Holdings LP director and Scw’exmx Tribal Council Terrence (Lee) Spahan in a press release.
“The Gateway 286 project is a 30-plus-year vision of past and present Nicola Valley Indigenous Chiefs and these monies will take our commercial and tourism development one more step closer to reality. This project will enhance the experience of the [traveling] public by providing much-needed services, and it will provide good-paying jobs and entrepreneurial opportunities for the residents of the Nicola Valley.”
Meanwhile, the City of Merritt is receiving a $500,000 grant related to economic recovery for communities that were affected by the flooding. The grant will go towards completing economic development projects and initiatives to support long-term economic recovery.
This is in addition to $329,000 in provincial funding for the City of Merritt to update flood-hazard mapping and develop new flood-mitigation plans.
Anger grows over Merritt evacuations
China's Economy Contracts Sharply as Covid Zero Cuts Output – BNN
(Bloomberg) — China’s economy contracted in April, with Covid outbreaks and lockdowns dragging the industrial and consumer sectors down to the weakest levels since early 2020 as millions of residents were confined to their homes and factories were forced to halt production.
Industrial output fell 2.9% in April from a year ago, worse than the median estimate of a 0.5% increase in a Bloomberg survey of economists. Retail sales contracted 11.1% in the period, weaker than a projected 6.6% drop. The unemployment rate climbed to 6.1%, higher than the forecast of 6%.
China’s economy has taken an enormous toll from the government’s stringent efforts to keep the virus at bay. Beijing has insisted on sticking with its Covid Zero strategy to curb infections, even though the high transmissibility of omicron puts cities at greater risk of repeatedly locking down and reopening compared to earlier strains.
“Covid outbreaks in April had a big impact on the economy, but the impact is short-term,” the National Bureau of Statistics said in a statement. “With progress in Covid controls and policies to stabilize the economy taking effect, the economy is likely to recover gradually.”
China’s benchmark CSI 300 stock index was down 0.3% as of 10:04 am local time. The onshore yuan was little changed at 6.7917 per dollar. The yield on the 10-year government bonds rose 1 basis point to 2.83%.
Fixed-asset investment increased 6.8% in the first four months of the year, largely in line with projected growth of 7%, likely supported by the government’s push to expand infrastructure spending.
The economic shocks from the zero-tolerance policy have pushed China’s ambitious full-year growth target of around 5.5% further out of reach, and is weighing on the global growth outlook.
Beijing has signaled that policy makers will step up support for the economy, with Premier Li Keqiang recently urging officials to ensure stability through fiscal and monetary policy.
The People’s Bank of China took steps on Sunday to ease a housing crunch by reducing mortgage rates for first-time homebuyers. It left the interest rate on one-year policy loans unchanged on Monday, as inflation pressure and worries about capital outflows reduce the scope for more easing.
Monetary stimulus is proving less effective because of the stringent virus restrictions, with data on Friday showing businesses and consumers had little appetite to borrow in April. Credit growth weakened sharply last month, with new yuan loans sinking to the lowest level since December 2017.
(Updates with comment from statistics office)
©2022 Bloomberg L.P.
Potential of Seaweed on Economy Being Explored in Upcoming Webinar – VOCM
A webinar on the potential of seaweed as an economic driver is coming later this month.
The webinar, put together by The Laurentic Forum Consortium, will look at how coastal communities can use an abundance of seaweed to boost the economy, as seaweed is being used as fertilizer, diet supplements, bioplastics, animal feed, pharmaceutical products, and much more.
Webinar moderator and the executive director of the Canadian Centre for Fisheries Innovation, Keith Hutchings, says seaweed farming could provide opportunities in Newfoundland and Labrador.
He says if utilized correctly, communities and regions can add one more industry to help sustain them.
The webinar is taking place May 19.
The Laurentic Forum consortium invites you to join us on May 19, 2022, to discuss the tremendous opportunity and potential associated with the seaweed industry.
— Laurentic Forum (@ForumLaurentic) May 11, 2022
Doncic helps Mavericks stun Suns with dominant performance in Game 7 – Sportsnet.ca
Wildlife rescue on Vancouver Island to limit visitors as avian flu continues to spread in B.C. – CBC.ca
When Is The Next Total Lunar Eclipse ‘Blood Moon?’ The Coming Once-In-430 Years ‘Twin’ Totality Will Be The Longest Until 2029 – Forbes
Silver investment demand jumped 12% in 2019
Europe kicks off vaccination programs | All media content | DW | 27.12.2020 – Deutsche Welle
Global Media Markets, 2015-2020, 2020-2025F, 2030F – TV and Radio Broadcasting, Film and Music, Information Services, Web Content, Search Portals And Social Media, Print Media, & Cable – GlobeNewswire
Science24 hours ago
SpaceX launches Starlink 4-15 mission, expands booster fleet – NASASpaceFlight.com – NASASpaceflight.com
Health10 hours ago
BC bird flu: Vancouver Island farmers on alert | CTV News – CTV News VI
Art9 hours ago
Judge for yourself: Man uses art to escape 'frenetic' period – BarrieToday
Art9 hours ago
Kirkland Lake museum asks for art donations to help fundraiser – CBC.ca
Health4 hours ago
Mental Health Issues Demand Resolution
Health11 hours ago
Eating Disorder Foundation Call Recent CIHI Statistics “Alarming” – VOCM
Sports1 hour ago
2022 Stanley Cup Playoffs Game 7: Rangers host Penguins and Flames take on Stars on Sunday – CBS Sports
Media1 hour ago
After Buffalo Massacre, Gov. Kathy Hochul Calls for Social Media Companies to Crack Down on Hate Speech – Vanity Fair