MBS Blog

Even if you discount the deeply embedded fatalistic perspective of many Ukrainians, this poll on www.unian.net  gives you an accurate read on the current mood of people here. With the continuous infighting and stagnation in Ukrainian politics, a rapidly declining currency, jobs drying up, and the constant drumbeat in the media that things will get worse (they never say when it will get better), it is no wonder many Ukrainians are downright grumpy.

Indeed, the words people here are using to describe the situation is that “it will be a cold winter.” Best medicine: hot borshch and cold vodka.

The best guess…and that is all it is…attitudes will remain this way until the middle of next year. As the weather improves, so will the spirits of Ukrainians. The flip side of fatalism is an ability to enjoy the small pleasures in life to their fullest extent.

 09.12.2008 12:20]  

Ukrainians break record of pessimism

Sociological polls have revealed a record level of social pessimism in Ukraine. In particular, residents of different regions have been extremely pessimistic in assessing the political and economical situation in Ukraine, and their own life.

These are the results of a poll carried out by “Research & Branding Group” in November of 2008 and were presented at a press conference by company’s sociologist Yevhen Kopatko.

According to an UNIAN correspondent, in particular, according to the results of the poll, in November of the current year, some 92% of Ukrainians assessed the political situation in Ukraine as unstable, only some 1% of those polled assessed it as stable, and some 7% assessed it as rather unstable. At the same time, in December of the year 2007, some 62% of those polled assessed the political situation in the country as unstable, some 10% assessed it as stable, and some 28% - as rather unstable.

Besides, some 89% of respondents assessed the country’s economic situation as bad. Some 2% of those polled assessed it as good, and some 9% assessed it as not bad and not good. In December of 2007, the economic situation in Ukraine was assessed as bad by some 58% of those polled, as good – by some 5%, and as not bad but also not good – by some 37%.

Asked about whether they were satisfied with their life, some 29% of those polled said they were satisfied, some 67% - unsatisfied, some 3% could not answer the question, and some 1% said they are both satisfied and unsatisfied.

The poll was carried out on November 22-30 in 24 Oblasts of Ukraine and the Crimean Autonomous Republic. In the whole, 2 thousand 87 people were polled. The error margin does not exceed 2.2%.

Technorati Tags: fatalism, Ukraine, borshch, Ukraine Oblasts, Crimean Autonomous Republic, Yevhen Kopatko, pessimism, Research & Branding Group, www.unian.net, vodka, Ukrainian politics, currency, media, Anton Olff,

Contrary to the recessionary trend in the general decline of overall advertising spend, some venues will see an increase. This is particularly true of internet advertising. It reflects the evolution of media enabled by technology, and the ability of companies to precisely target (sounding very military here!!) specific markets efficiently. The bottom line is more advertising bang (effect) for the buck (dollars spent).

The recent news regarding the imminent “death” of the so-called old media outlets such as newspapers, is just the beginning of the story. Next up in the creative destruction process could be other forms of print media, and perhaps television in its current form.

The internet is replacing other forms of media by absorbing, restructuring and repackaging them. Technological innovations…such as the Apple iPhone and other data phones…are allowing the media to be disseminated to a wider audience in a more direct manner. This has opened up new forms of advertising placement which are seeing a shift,  as the article from the Russian Daily,  www.kommersant.com indicates:

Ad Market to Dip in 2009

Demand for advertising will fall 11 percent in 2009, predicts Group M, based on events on November, when all ad deals for next year were placed on hold. According to Group M, the media division of WPP, the world’s largest communications holding, Russian advertisers will cut back their activities in all media except Internet contextual advertising. While total expenditures on advertising in Russia rose 18 percent to 275 billion rubles in 2008, it will fall in 2009 to 244 billion rubles. Group M will publish its report on the coming market within the next few days. 

Projections for Russia are based on countries such as Kazakhstan and Thailand, where the economic crisis began a year or more ago, explained Konstantin Vashentsev, research director for the Maxus agency, part of Group M. He said print and outdoor advertising would be the first to feel the brunt of the crisis. In Thailand, newspapers lost 11 percent of their ad income, and magazines 12 percent, the agency says. Outdoor advertising agencies in Kazakhstan have been forced to lower their prices 30-40 percent. 

The most impressive statistics on the ad market are in the Internet. In spite of Group M expectations of 10-percent growth this year, advertising has increased 55 percent in the first nine months to 4.4-4.5 billion rubles. Outdoor ad operators experienced a 14-percent rise in income, to 33.8-34 billion rubles, in the first three quarters of the year. Russia’s largest television advertiser Video International is also optimistic. It announced yesterday that it had reached an agreement with Reckitt Benckiser, owner of the Calgon, Cillit and Vanish brands and one of Russia’s top ten advertisers (with a budget of over $58.5 million in 2007), for 2009 ad placement.

Technorati Tags: recession, advertising, Video International, Reckitt Benckiser, Calgon, Cillit, Vanish, Kazakhstan, Thailand, Konstantin Vashentsev, Maxus, Ad market, Group M, WPP, Apple iPhone, data phones, Anton Olff, Russian Daily, www.kommersant.com, print media, television, internet, creative destruction process, media, technology, old media, newspapers,

Russia’s economy is captive to oil & gas prices. If the price of crude continues to decline-and there is sufficient reason that it will continue to do so-then the prospects for Russia’s economy must also be adjusted.

Most Russians have painful memories of the 1998 financial crisis. It is one of prime motivations behind the Russian Government’s aggressive stance regarding the ruble. The political backlash of a currency rout could be devastating.

 As this article from the Financial Times (www.ft.com) states, Russia is now in a much better financial position compared with the 1990s. However, at the rate that the Russian reserves are being utilized, the Russian Government may not have sufficient ammunition to counter any new economic shocks.

At some point, the Russian Government might consider even closer ties with cash rich China.  These might include the sale or long term leasing of strategic assets located in Siberia.

Rouble exodus hits Russia credit rating

By Catherine Belton in Moscow

Published: December 8 2008

Russia on Monday became the first G8 country since the start of the financial crisis to have its credit rating downgraded after Standard and Poor’s took fright at the recent exodus from the rouble and sharp drop in oil prices.

S&P said it had lowered Russia’s foreign currency credit rating by one notch from BBB+ to BBB because of the “rapid depletion” of the country’s foreign exchange reserves and the “difficulty of meeting the country’s external financing needs”. It said the outlook for the rating was negative.

Russia’s reserves have fallen by $128bn since August to $455bn, as the country battles the capital flight that began following the war with Georgia and escalated as the oil price fell and the global crisis worsened.

S&P said Russia could be forced to spend all $200bn now parked in its two sovereign wealth funds on recapitalising the banking system and covering fiscal deficits in 2009 and 2010.

The agency expects Russia to run a current account deficit next year of 2.6 per cent of gross domestic product due to the oil price fall, putting further pressure on the balance of payments.

“There are a lot of layers of concern,” said Frank Gill, primary credit analyst at Standard and Poor’s. “There are macroeconomic and political risks . . . and Russia has not operated a current account deficit since 1997 and that was less than 1 per cent of GDP.”

Vladimir Putin, Russia’s prime minister, has staked his political credibility on avoiding a sharp rouble depreciation.

The thought of devaluation raises the spectre of the 1998 rouble crash that wiped out Russians’ savings, although economists say any devaluation this time.

Technorati Tags: Russian, ruble, Georgia, Vladimir Putin, current account deficit, Frank Gill, political risks, capital flight, credit rating, G8, Catherine Belton, Moscow, Standard and Poors, Financial Times, GDP, www.ft.com, Anton Olff, Russian Government, Russian economy, oil prices, 1998 financial crisis, currency devaluation