tonia and other rough chemicals were doused onto the meat to kill a call i bacteria and make it safe for consumption although this product is for some reasonable period public backlash and many companies gave up ordering mysteriously and finally to be ok while the mainstream media for once actually did something valuable for society and what did they get in return sued yeah the pink slime crew decided to sue a.b.c. news and forced them not to divulge their company secrets as well as punish them for defamation against their product which led to profit losses and guess what they won the lawsuit well faming products that on mass could destroy the health of millions of americans as no blasphemy in my book but my opinion.

is a. stream quality enjoy your favorite. if you're away from your television. with your mobile device you can watch on t.v. anytime anywhere. in welcome to the money where the business of russia is business i'm peter lavelle as europe's economy continues to language and global growth sluggish russia's putin warns of a possible recession at home this year's g.d.p. estimates he has ordered the government into action facing a difficult external environment what does russia need to do to maintain growth.

to discuss this i'm joined by vladimir put up of he is the c.e.o. of capital investment management we also have chicago he is the chief economist for russia and c.i.s. with renaissance capital and we're joined by ben eris he is the editor in chief of business new europe ok ben this is the first time we've seen this in years mr putin is getting a little nervous about the economy does he have good reason to this it's towards growth stops and we haven't seen this for nearly a decade and in two thousand when he took over the economy boomed and is running at you know between six eight percent since and now the growth is going to be nothing so they're very worried in a sort of a shock to the system. you know those definitely for indicator of the key america indicators this show with some slowdown in the economy and it's really a function recession it's also sort of subsume but if you look at this the miss for the first quarter g.d.p. is go down by one to one point one percent that's can be taken when the real real

growth rates can be taken by some sort of source also some fiscal tightening which we're done but we would expect something for this year the numbers to do something something we rolled through to and of course. well you know actually i think the economy has indeed slowed down i don't think there is a sense of desperation what that's what i don't feel that a lot exactly exactly and actually i think it was expected the first quarter will be somewhat tweak given the fact that last year the first quarter was very strong and actually we were very strong that tell everybody that they're all prices will were high and. if you'd like from that from the two thousand and ten from zero to doesn't and i recession but i just wanted to to point out that we expect the economy to strengthen d.c. here as we as you go towards the end of the year so i think this slowdown to see right now is a soft spot that the economy will actually overcome as as you go into the end of the year so it's not time to panic yet i think. yeah. probably quite useful in some

i was pleased to get that going in the us is a nice goes because it's been living off lots of the revenues in the past and they haven't i think about efficiency and productivity and the kind of things and this has been even slower than we were expected saying it was a slowdown in the first quarter but it's really slowed a lot more than they were expecting and this is push them into going ahead with with making the reforms and of course we have to wait and see if this is going to be effective and of course it's going to take years for these things to really prides but it has refocused everybody on what needs to be done here that some short term measures which can be done when we focus on the wallace reports was a little long term measure of what should be built to sustain the for the groups that i would say increase spending or what more can the reforms mean we can financial markets and pension reform which really should stimulate the girls all the local which is really you know make make to make investments into this economy really you know feasible and we'll see but people think about inflation ok i mean

right but i mean most people don't think about those issues but if anyone thinks that is that is right but we expect inflation to actually go down in the second half of your eyes as the harvest will be better so i think in terms of the short term measure that you're talking about number one the central bank should be a little bit more aggressive in cutting rates and i think taking over from ignited the cigs actually what will happen and the second thing that they can do in the short term is probably force the state on enterprises to increase their investment program this is already happening just from this is already happening with lukoil so i think this is the kind of things they can do. very in a very short term if we step back a second in the causes of this twofold one is there's a journalist in europe ok i want to get external factors later because here. which is that russia could do nothing about it beholden to what happens in europe and that's going badly so that's putting it and secondly there's the internal things and the need to pass so that's. this is

a short term things they can do like cut rates increase spending and they have those plans to keep the economy a bit of a shot in the but then further out i mean that this comes back to the fundamental problems with the economy the lack of efficiency the bureaucracy the corruption and these are long term fixes and really mischances should have made those reforms in two thousand and five when we did it in their statement to me i would say again just want to say again with a long term it's much more important to focus on the reforms short term that's obvious that someone that can be done but would. have been worse was into the economy and pulled from the public events it was an opportunity situation i think it's an opportunity and as you know this is something toobin always talking about every time russia comes under pressure under pressure in terms of law or price or more challenging external environment we're always saying d.c. is an opportunity unfortunately unfortunately they haven't been very effective in taking taking these opportunities in the past agreed yes. it's so volatile i mean

we don't do smooth growth it's either booming at six to eight percent or it's collapsing you know nine percent contraction in the crisis and this is one of the perennial problems but i mean that's to do again with the very top heavy structure of the economy very big companies that are in the right group model. because it really has a growth momentum and they just have what they have and they make money out of it and they try and make more money as a bit and then everything goes wrong and it collapses again and you know we missed the sort of you know the german middle the small and medium sized enterprises and there hasn't this been a sense of like we need to get things going we need money now to do the things we're going to do so we're going to turn to the big companies as the source of money and not enough attention has been. building up the small medium sized enterprises which is basically to go at the best we can i mean it's a way to go it's one of the ways to go obviously you know trucking the foreign investors into russia in the world in which to work because there's also the i don't want to use the to reduce. and that's the key it won't stop improve the local

source for example for the pension reform is very important for us because if you look at the pension from the out of smart people who bring their own pension for forward probably ninety percent of all the fixed income plus postponing infrastructure in the way with the something which will drive the growth so that's something which i think the russian government clearly understand and respond to mr putin close. to reform no new these conditions but i think it's because there's a sense of urgency i have unfortunately i can't say there is a sense of urgency but i surely do it he wants me to be very clear that you know he's worried ok i don't when he says he's worried it means something i think he's worried but once again listening to him yesterday at his almost five five five hour long conversation we would we do people he didn't strike as as a person in desperation however he wanted to show that he's in control. that i think that's one of probably just the kind of an idea that he wanted to say but i

just wanted to pick up on something of some something the other guest said one area where russia could improve a lot as it is in the so-called ease of doing business indicators that the world bank compares all the countries by and this is something that putin has put forward is a key objective in his presidency he wants russia to be the twentieth the twentieth place in the world use for now even now it's one hundred twelfth so there is a long long way a long way to go but i think the effort to improve this ranking eat fresh or to place by two thousand and eighteen which i doubt even if it were yesterday we're going to be companies. i mean events right you know we have a new president so you know this is putin's second by the pool and he set off on this one with a much clearer reform agenda focusing on these are doing business to give because the easy things of already been done which you said some of the important things haven't been touched on one of the of the eight factors that go into the. one is

connecting companies to power a system russia is a huge energy producer it is also the most difficult place in the world to connect a company to a power supply which is upside down and just fixing bats will take russia straight up in the top eighty. but this is more of a sort of general economic issues not of big companies should this fixing that particular problem would make everybody's life easier and you see in the media payback so in that sense are very encouraged that they're focused on pragmatic goals which are actually judged by an external adjudicates in this case the world bank so the super some discipline so that's very encouraging but you still need to do it but i mean what about the average consumer what are they going to be thinking about in this economy for this year for example think consumers so much more focus and i mean russia was doing by consumer can we all can you know it's you know that's not what i'm asking and we are not you consumers out there while i know it's low and on the field if you if you look what's what's been the basic you know the month which was four for four more years for them for consumer consumable of course

huge the last little driving we call it was in such much more in moderation with consumers more to the savings savings patterns and so especially what was what would go so the key for if you look at the consumer groups and the real time source are all four. and the most was that zero so the key and i was really to turn the call me from being able to remember the consumer which already you know that level of consumption penetration i mean the credit for that we moved quite quite quite far from this which will be with other with other countries now we really need to focus more on investment but i definitely do that actually even though we have indeed seen some slowdown in consumption spending in the beginning of the year which corresponds to the kind of figures that we see on the g.d.p. side. consumer will always spend he will spend on cars if you spend on uncaught and travel abroad so i don't really want a bad russian consumer the next ten years but i definitely agree that we should worry about investment investment and infrastructure investment in roads and i

think that world cup event in two thousand and eighteen is going to help a little bit but is going to help in certain pockets and i think there is a more a need for a more consistent more comprehensive program to increase the level of investment if you can any investment the second half it would about the average consumer. spending like crazy very important means there could be very too much. but from the west maybe but the penetration of here is so low i mean people don't have mortgages that ever have credit cards and so they can afford to pour. i mean they're going to spend because they still does most of stuff that they haven't got yet you know that we take for granted you know coffee machines and nice a fridge and better holiday and what have you and that's that's the catch up you know the potential for spending is it remains enormous and this will remain the engine of the growth that underpin everything else and so you're guaranteed of a steady drive forward of growth and that's very good for the country and you need to capitalize that said you know when i was first here in ninety three there was nothing and today it's more or less

a normal country with some big problems and everybody's course like everywhere else and they were going to jump in here we're going to go to a short break and after that short break we'll continue our discussion on russia's economy. well into the future what makes two pewters these days so super is that the memory for that russian research is have got a few ideas that could make cognitive computing a reality what about the process or check out a radical new architecture that promises unparalleled power design for the stars and is that got you all hot under the collar to quit don't worry because the latest cooling systems ensure neither you nor the gold for computers break

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international airport in the very heart of moscow. welcome back to on the money where the business of russia is business i'm peter lavelle to remind you we're talking about russia's economy but before we continue our discussion let's have a look at this report. while recession is hitting the global economy russia is secured with a safety blanket this spring the i.m.f. has not yet down its estimates for world g.d.p. from three and a half to three point two percent growth deficit in brusha is part of this larger

worldwide paradox we can't you demand in the us and europe have hampered oil exports also the prospect of deflation in the euro zone and the bank crisis in cyprus have added to the negative sentiment thus in the first quarter of this year russian g.d.p. grew by mere one point one percent. as a result the ministry of economic development has upgraded its creative people are cast for twenty three teams bringing it down to two point four percent according to russian president vladimir putin these are disturbing symptoms at the same time he stressed that the russian economy has good margins of safety. i doodled want to dramatize the situation not necessarily the russian economy has a sufficient safety net. despite growing volatility on global markets prices on oil and other results russia has substantial golden currency reserves its budget reserve funds are a reliable safety cushion and what is most important people's real incomes are not

shrinking but are steadily growing many experts are optimistic about the second half of twenty thirteen among them are analysts from the group they see a chance a fresh an economy rebounding this would in part be o. to a low base effect and slowing inflation investments into the russian market has so far been receding this came mostly due to risks that related with cyprus and falling commodity prices however legislation aimed at simplifying some procedures is on the way for example paying taxes was already made easier by a simplified eighty procedure and the introduction of electronic services that and similar reforms are bound to pump more foreign money into the economy the ease of doing business index for russia has been recently revisited and upgraded the ministry of economic development adjusted the world bank assessment of doing business in russia it took into consideration the reforms that were carried out in

twenty twelve and twenty thirteen the latest rankings are russian ride six positions from place one hundred eighteen to place one hundred twelve the ministry has calculated just how many points russia would arise if all the planned reforms had been implemented the theoretical result is impressive russia could already be at forty fourth place but for of legend it puts him and his government that's not nearly good enough. for the lagging global crisis and is a gloomy times russia's required purry day reason work when all the money party. ok we heard we heard the word cyprus spent. in that report. ricochet effect. we were hoping things were going to pick up a bit for us to report the sentiments being depressed and rather than the slow build that we were expecting now everyone's been put on the back foot again i mean

one of the problems here i mean we mentioned investments very low but it's partly psychological is due to a lack of confidence people want to invest in their businesses because you have my plug up any second and we had that last summer where we think that suddenly came to help because there was just phantom crisis and the crisis didn't happen but everyone including the government reacted as if it had and then with cyprus just emerges same thing as another setback to confidence and that's one of the big problems until we get some more sort of security looking forward people won't start investing but would you agree with that because i think we'll be looking at what happened the cyprus situation for a while now it's going to ricochet around. maybe too much attention to cyprus where it really deserves if you look at the so proposal one one hundredth of the russian economy if they don't mean that there is there was an unforced haircut that's a very interesting thing that's what i call theft but anyway i mean i completely disagree with you but what i can say it's really you know also produced all wrong

you know if you do it. once very painful to move forward you can't really pull you out you know playing with this so it's really you know all the things it will continue they're still we. kept all control. which is which is get them but you know you can hear that almost there with some better news but that's true and it's so all in so it's a big story but it's very important hope to move forward in europe with other countries if you know from from a purely russian perspective i don't i don't need to it's a big deal i think the direct market comic effect everybody everybody agreed are going to get me no but i do also think if you think it makes russians want to save more money in their own country or i guess you're referring to the fact that i actually could see some positive. the story in terms of some of the money that has been deposited there coming back to russia i don't think these are the kind of money that would like to come back to us and i think we'll probably find out i've been used to get deported somewhere else but again i'm not for example in part of

baltics but i think the story for us she's not there i mean we cannot make in fact the effect was by confidence via sentiment and unfortunately it happened at a point in the cycle when the russian economy will lose already suffering so we just added to the overall gloomy. about russia double whammy double whammy absolutely. it's just unfortunate and you know the whole as i said in the beginning the problems external problems are weighing on russia and there's not much they can do i mean if you're going to look at him is that i mean the country's top of the getting progressively smaller you know greece and then. in the next kind. of these things are getting less and less important maybe but it doesn't help the situation the crisis is being going on for four years typically that's the length of this is going to be just they have to deal with it now it's priced in the crisis in europe i mean that should be some kind of comfort in a way isn't in the mean you know there is crisis so it's fully priced because it's

also the what's what's the capital markets you know the situation will not go worse with the group also in the works than now it's possible the market research for a couple of years but no no no no there's a sneer puffers from external shocks as far as russia russia is concerned i'm still all prices are comfortable levels one hundred dollars i think that is something that the russians should be happy with so if we have one hundred one hundred or all prices but economies growing at twenty percent you can imagine if all price were at seventy eighty what the growth would be so i think this provides a kind of a useful buffer also i think there's some other bright bright spots in the world economy the u.s. economy is actually performing better than expected i think that there is this big debates. right now in europe about austerity and there are less and less people that are excited about austerity so might see a little bit of a movement in the opposite direction you know what you don't have got all because you need to spend a little bit more money and i think the public debate in europe is moving in that direction which from my perspective is the right direction then yeah i mean i agree

and the everyone seems to agree the second half of this year is going to be better than the first and this was just a soft patch i think going into twenty fourteen and hopefully we see you know i think you could probably argue that we hit the bottom of this crisis sometime end of last year beginning of this year and we're now looking at a slow growth and as we come out the other side the confidence will build and things will pick up because at the end of the day russia doesn't have all the problems that they do in europe i mean it doesn't have. it has a consumer demand this so there are plenty of credit banking sectors very sound and they're seen as a sentiment turns that we can go back to actually concentrating on at the same time eventually kremlin which is more committed to reform that it's been you know any time last five years so these are all positives it's just a question of when they came in and time should be soon if you like their prognosis well i agree with you of the key problem with europe though europe is too would be a big. trading partner for usher in the incremental it also you saw dollar europe

the heat from russian to it was all a huge sort of like. twenty to thirty or forty basis points from a real g.d.p. growth came from the small the only real in europe so what's important is the key prices for oil for energy and it's really driving for the by really you know the huge growth nobody expected huge growth in europe so if you see european central bank which mean more and more accommodating it would be seen other than other central banks that would obviously help especially that what we see now with the recession is in place inflation is used to so it's quite comfortable to try to make some more force on the on a. similar sort. in the big surprises you know all eyes will be will be in russia russia this year because all who are working on the budget through and i hope to continue begin effect on this year because the main the main also comes

from this year but longer term it's always a very right thing to do you know we we much appreciate it the thing that really are the numbers for this year then look forward for four more reforms pension reforms would help a lot you know but that energy prices which your prognosis for this year all. we need our forecasts about a hundred. more or less and the same level in the next couple of years but i just wanted to actually gentlemen said that i think we should start adjusting our expectations about how and what the russians new normal will look like in the medium term it's not realistic in march expected to see quarter will be growing by a six seven eight percent before a crisis russia's new normal is four percent four percent are the kind of growth rates that should be consistent we are the world these were where the state of the russian economy is so you know how four percent is something that we should be happy with and i think most countries. i mean i think it's one of the

big changes here and one of the causes of the slow dimension this budget rule which ties russia's budget spending to previous oil prices is a very prudent change it's a big change and one of the absence of that has been the dimmers hands are tied when it comes to spending and there has been real cuts in spending for the first time in nearly a decade and the spending was growing twenty forty percent maximum and i think it's this year it's like two three percent and this is weighing in the long term this is before about the volatility of the growth you are going to want but this is what the budget will do will give some sort of stability to it and so the spending that makes the whole thing a lot more predictable so the newnham of the slower growth but it's much more stable and it is stable you can plan and then this is. good for a long term perspective and so the end of the booms we enjoyed in the in the past will become a thing of the past but hopefully we can actually start building something a bit more sun it's sort of your last word i. disagree with you know they all think

oh it was more like look like with the girls like seventy percent small it's like a bubble where the girls look like for you know it's more likely to stay the course which will surely would help to work on the officials were to work in the public theater to work on the all the reforms to all the figures so it's not so bad after all gentlemen we've run out of time many thanks to my guest and thanks to our viewers for watching us here on on the money see you next time instead of our.

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