Russia has become more economically self-sufficient, independent
and isolated. Russia continues to trade with and want to influence neighboring
countries. Russia shares large borders with China, Mongolia and Kazakhstan in
addition to multiple borders with several European countries. Russia continues
to be too militarized and paranoid because their borders are actually
impossible to defend.
Russia has 121.6 square miles of arable land and 6,612,074
square miles of permafrost. Russia can grow its own food. Polls indicate a 79%
favorable rating in Russia. The government controls the media. Nominal GDP, per
capita GDP and Trade Surplus are up. Unemployment and Debt to GDP are low.
Household income is low. Inflation is up. Russia’s tendency to arrest foreign
visitors has resulted in a decline in its tourist industry.
Russia is a major exporter of raw material and like to devalue
their currency to lower their prices. This causes inflation. Inflation is good
if you are rich or a home-owner, because the value of whatever you own goes up.
Commodities like oil continue to go up and down, so Russian consumers continue
on their roller-coaster ride. Russia is beginning to create a “rainy-day”
saving plan for the lean years.
In 2023 Russia’s Nominal GDP was $1.862 trillion. Their
population was 144,444,359, Per Capita GDP was $13,006. Household Income was
$7083. Trade Surplus was $140 billion. Debt to GDP was 21%, Unemployment is
2.8%. Inflation 2021-2023 is 28.5%. Labor force 70m.
In
2021, Russia's main trade partner was China, as the volume of export and import
trade between the two countries reached nearly $141 billion U.S. dollars. China
was the country's both leading import origin and export destination. Other trading partners include
Germany, Netherlands, Belarus, US, Turkey, Italy, S Korea, UK, Kazakhstan and
Poland. Primary exports include oil, metals, machinery, chemicals, and forestry products. Principal imports include machinery and foods.
After 1989, the economy of Russia gradually transformed
from a planned economy into
a mixed market-oriented economy. It
has enormous natural resources, particularly oil and natural gas. In 2023, it was the world's 11th-largest
economy by nominal GDP according to IMF. Due
to a volatile currency exchange rate, Russia's
GDP as measured in dollars fluctuates sharply. Russia was the last major
economy to join the WTO, becoming a member in 2012.
Russia’s land area covers 6.602 million
square miles. Russia has oil, natural gas, coal
Following the 2022 Russian invasion of Ukraine, the country has faced extensive sanctions and
boycotts from the Western world and its
allies which are aimed at isolating the Russian economy from the Western
financial system. Russia's economy has been affected by the sanctions but
appears relatively resilient to them.
The Russian
economy is volatile. Since 1989 its institutional environment was transformed
from a socialist command economy to a capitalistic market system. Its
industrial structure dramatically shifted away from heavy investment in
manufacturing and agriculture toward market services, oil, gas, and mining.
Richard
Connolly argues that for the last four centuries, there are four main
characteristics of the Russian economy that have shaped the system and
persisted despite the political upheavals. First of all the weakness of the
legal system means that impartial courts do not rule and contracts are
problematic. Second is the underdevelopment of modern economic activities, with
very basic peasant agriculture dominant into the 1930s. Third is technological
underdevelopment, eased somewhat by borrowing from the West in the 1920s. And
fourth lower living standards compared to Western Europe and North America.
Russian Empire
The economy of the Russian
Empire covers the economic history of
Russia from 1721 to the October Revolution of 1917 (which ushered in a period of civil war, culminating in
the creation of the Soviet Union).
Russian national income per capita increased and moved to closer
to the most developed economies of Northern and Western Europe from the late
17th century to the 1740s. After the 1740s, the Russian economy stagnated
and declined. In the 18th century, Russian national income per capita was about
40-70% of British per capita income. By 1860, Russian GDP per capita was
similar to that of Japan; one-third of GDP per capita in the United States or
the United Kingdom; and twice that of China or India. Russia was a
late industrializer.
Serfdom held back development
of the wage labor
market and
created a shortage of labor for industry, was abolished in 1861. GDP per
capita was volatile and did not substantially increase. Steady economic
growth began in the 1890s, alongside a structural transformation of the Russian
economy. By the time World War I started, more than half the Russian
economy was still devoted to agriculture. By the early 20th century, the
Russian economy had fallen further behind the American and British
economies. From the late 19th century to the early 20th century, the economy
grew at a similar pace as the Japanese economy and faster than the Indian and
Chinese economies.
Soviet Union
Beginning in 1928, the course of
the Soviet Union's economy
was guided by a series of five-year plans. By the
1950s, the Soviet Union had evolved from a mainly agrarian society into
an industrial society. By the 1970s the Soviet Union was
in an Era of Stagnation. The
complex demands of the modern economy and inflexible administration overwhelmed
and constrained the central planners. The volume of decisions facing planners
in Moscow became unmanageable. The cumbersome
procedures for bureaucratic administration foreclosed the free communication
and flexible response required at the enterprise level for dealing with worker
alienation, innovation, customers, and suppliers.
From 1975 to 1985, corruption and data
manipulation became common practice within the bureaucracy to
report satisfied targets and quotas, thus entrenching the crisis. Starting in
1986, Mikhail Gorbachev attempted
to address economic problems by moving towards a market-oriented socialist economy. Gorbachev's policies of Perestroika failed to rejuvenate the Soviet economy; instead, a process
of political and economic disintegration culminated in the breakup
of the Soviet Union in 1991.
Transition to market economy (1991–98)
Following the collapse of the Soviet Union, Russia
underwent a radical transformation, moving from a centrally planned economy to
a globally integrated market economy. Corrupt
and haphazard privatization processes
turned over major state-owned firms to politically connected "oligarchs",
which has left equity ownership highly concentrated.
Yeltsin's program of radical,
market-oriented reform came to be known as a "shock therapy". It was based on the policies associated with the Washington Consensus, recommendations of the IMF and a group of top American
economists, including Larry Summers who
in 1994 urged for "the three '-ations'—privatization, stabilization, and
liberalization" to be "completed as soon as possible." With
deep corruption afflicting
the process, the result was disastrous, with real GDP falling by more than 40%
by 1999, hyperinflation which
wiped out personal savings, crime and destitution spreading rapidly. The
jump in prices from shock therapy wiped out the modest savings accumulated by
Russians under socialism and resulted in a regressive redistribution of wealth
in favor of elites who owned non-monetary assets.
Shock therapy was accompanied by a drop in the standard of
living, including surging economic inequality and poverty, along with
increased excess mortality and a decline in life expectancy. Russia
suffered the largest peacetime rise in mortality ever experienced by an
industrialized country. Likewise, the consumption of meat decreased: in
1990, an average citizen of the RSFSR consumed 63 kg of meat a year; by
1999, it had decreased to 45 kg.
The majority of state enterprises were privatized amid great
controversy and subsequently came to be owned by insiders for far less
than they were worth. For example, the director of a factory during the
Soviet regime would often become the owner of the same enterprise. Under the
government's cover, outrageous financial manipulations were performed that
enriched a narrow group of individuals at key positions of business and
government. Many of them promptly invested their newfound wealth abroad,
producing an enormous capital flight. This rapid privatization of public assets, and the
widespread corruption associated with it, became widely known throughout Russia
as "prikhvatizatisiya," or "grab-itization."
Difficulties in collecting government revenues amid the
collapsing economy and dependence on short-term borrowing to finance budget
deficits led to the 1998 Russian financial crisis.
In the 1990s, Russia was a major borrower from the International Monetary Fund, with
loan facilities totaling $20 billion. The IMF was criticized for lending so
much, as Russia introduced little of the reforms promised for the money and a
large part of these funds could have been "diverted from their intended
purpose and included in the flows of capital that left the country illegally".
On 24 September 1993, at a meeting of
the Commonwealth
of Independent States (CIS)
Council of Heads of State in Moscow, Azerbaijan, Armenia, Belarus, Kazakhstan,
Kyrgyzstan, Moldova, Russia, Tajikistan, Uzbekistan signed the Treaty on the
creation of an Economic Union which reinforces by an international agreement
the intention to create an economic union through the step-by-step creation of
a free trade area, a customs union and conditions for the free movement of
goods, services, capital and labor. All these countries have ratified the
Treaty and it entered into force on 14 January 1994. Turkmenistan and
Georgia joined in 1994 and ratified the Treaty, but Georgia withdrew in 2009.
On 15 April 1994, at a meeting of
the Commonwealth
of Independent States (CIS)
Council of Heads of State in Moscow, all 12 post-Soviet
states signed the international Agreement on the Establishment of a Free Trade Area in
order to move towards the creation of an economic union. Article 17 also
confirmed the intention to conclude a free trade agreement in
services. Article 1 indicated that this was "the first stage of the
creation of the Economic Union", but in 1999 the countries agreed to
remove this phrase from the agreement. Russia concluded bilateral
free trade agreements with all CIS countries and did not switch to a
multilateral free trade regime in 1999. Bilateral free trade agreements, except
for Georgia, Azerbaijan and Turkmenistan (all of these are in force as of
2024), ceased to apply only after 2012 with Russia's accession to the new
multilateral CIS free trade area.
Further integration took place outside the legal framework of
the CIS. Pursuant to the Treaty on the creation of an Economic Union, the
Agreement on the Customs Union between the Russian Federation and the Republic
of Belarus was signed on 6 January 1995 in Minsk. The Government of the
Republic of Belarus and the Government of the Russian Federation, on the one
side, and the Government of the Republic of Kazakhstan, on the other side,
signed an Agreement on the Customs Union in Moscow on 20 January 1995 in order
to move towards the creation of an economic union as envisaged by the
treaty. The implementation of these agreements made it possible to launch
the Customs Union of the Eurasian Economic Community in 2010. According to the database of international treaties
of the Eurasian Economic Union, these agreements are still in force as of 2024 and apply in
part not contrary to the Treaty on the Eurasian Economic Union.
International agreements such as the following have further
deepened trade and economic relations and integration with Belarus. The
Community of Belarus and Russia was founded on 2 April 1996. The "Treaty
on the Union between Belarus and Russia" was signed on 2 April 1997. And
finally the Treaty on the Creation of a Union State of Russia and
Belarus was signed on 8 December 1999.
Recovery and growth (1999–2008)
Russia bounced back quickly from the August 1998 financial
crash, partly because of a devaluation of the ruble, which made domestic
producers more competitive nationally and internationally.
Between 2000 and 2002, significant pro-growth economic reforms
included a comprehensive tax reform, which introduced a flat income tax of
13%; and a broad effort at deregulation which benefited small
and medium-sized enterprises.
Between 2000 and 2008, Russian economy got a boost from rising
commodity prices. GDP grew on average 7% per year. Disposable incomes more
than doubled and in dollar-denominated
terms increased eightfold. The volume of consumer credit between 2000 and
2006 increased 45 times, fueling a boom in private consumption. The number
of people living below poverty line declined from 30% in 2000 to 14% in 2008.
Russia repaid its borrowing of $3.3billion from the IMF three
years early in 2005.
Inflation remained
a problem however, as the central bank aggressively expanded money supply to combat appreciation of the ruble. Nevertheless, in
2007 the World Bank declared that the Russian
economy achieved "unprecedented macroeconomic stability". Until
October 2007, Russia maintained impressive fiscal discipline with budget
surpluses every year from 2000.
Russian banks were hit by the
global credit crunch in
2008, though no long term damage was done thanks to proactive and timely
response by the government and central bank, which shielded the banking system
from effects of the global financial crisis. A sharp, but brief recession in Russia was followed by a strong recovery beginning in late 2009.
Between 2000 and 2012, Russia's energy
exports fueled a rapid growth in living standards, with
real disposable income rising
by 160%. In dollar-denominated terms
this amounted to a more than sevenfold increase in disposable incomes since
2000. In the same period, unemployment and poverty more than halved and
Russians' self-assessed life satisfaction also rose significantly. This growth was a combined
result of the 2000s commodities boom, high
oil prices, as well as prudent economic and fiscal
policies. However, these gains have been distributed unevenly, as the 110
wealthiest individuals were found in a report by Credit Suisse to own 35% of
all financial assets held
by Russian households. Russia
also has the second-largest volume of illicit money outflows, having lost over
$880 billion between 2002 and 2011 in this way. Since 2008 Forbes has repeatedly
named Moscow the
"billionaire capital of the world”.
In July 2010, Russia, together with
Belarus and Kazakhstan, became a founding member of the Customs Union of the Eurasian Economic Community (EurAsEC), and the EurAsEC Single Economic Space, a common market of
the same countries, came into force on 1 January 2012, superseding the
bilateral agreements on free trade. At the same time Russia's membership to
the WTO was accepted in 2011.
Russia joined the World Trade Organization (WTO) on 22 August 2012 after 19 years of
negotiations. On 20 September 2012, the multi-lateral Free Trade Area of
the Commonwealth
of Independent States (CIS
FTA) came into force for Russia and subsequently superseded previous bilateral
agreements among 9 participating post-Soviet states. In 2015, Russia
became a founding member of the Eurasian Economic Union (EAEU), which replaced EurAsEC and envisaged a
supranational economic union (the
deepest stage of economic integration).
Rapid GDP and income growth continued
until 2013. The most important topic of discussion in the economy for a decade
was the middle-income trap. In 2013, the World Bank announced that Russia had graduated to a high-income economy based on the results of 2012 but in 2016 it was
reclassified as an upper-middle income economy due to changes in the exchange rate of the Russian ruble,
which is a floating currency. While
the UN Human Development Index, which assesses progress in the standard of living, health and
education, ranks Russia among the 'very
high human development'
countries.
Russian leaders repeatedly spoke of the need to diversify the
economy away from its dependence on oil and gas and foster a high-technology
sector. In 2012 oil, gas and petroleum products accounted for over 70% of
total exports. This economic model appeared to show its limits, when after
years of strong performance, the Russian economy expanded by a mere 1.3% in
2013. Several reasons were proposed to explain the slowdown, including a
prolonged recession in the EU, which is Russia's largest trading partner, stagnant oil prices,
lack of spare industrial capacity and demographic problems. Political turmoil in neighboring Ukraine added to the
uncertainty and suppressed investment.
Following the annexation
of Crimea in March 2014 and Russia's
involvement in the ongoing War in Donbas, the United States, the European Union, Canada, and Japan imposed sanctions on
Russia. This led to the decline of the Russian ruble and sparked fears of
a Russian financial crisis. Russia responded with sanctions against a number of
countries, including a one-year period of total ban on food imports from the
European Union and the United States.
According to the Russian
economic ministry in July 2014,
GDP growth in the first half of 2014 was 1%. The ministry projected growth of
0.5% for 2014. The Russian economy grew by a better than expected 0.6% in
2014. Russia is rated one of the most unequal of the world's major economies.
As a result of the World Bank's
designation of a high-income economy, Barack Obama issued a proclamation 9188:
"I have determined that Russia is sufficiently advanced in economic
development and improved in trade competitiveness that it is appropriate to
terminate the designation of Russia as a beneficiary developing country
effective October 3, 2014." U.S. Customs and Border Protection (CBP)
indicated that Russia formally graduated from the GSP program on 4 October
2014.
As of 2015, real income was
still lower for 99% of Russians than it was in 1991.
The Russian economy risked going into
recession from early 2014, mainly due to falling oil prices, sanctions, and the
subsequent capital flight. While
in 2014 GDP growth remained positive at 0.6%, in 2015 the Russian economy
shrunk by 3.7% and was expected to shrink further in 2016. By 2016, the
Russian economy rebounded with 0.3% GDP growth and officially exited recession.
The growth continued in 2017, with an increase of 1.5%.
In January 2016, Bloomberg rated
Russia's economy as the 12th most innovative in the world, up from 14th in
January 2015 and 18th in January 2014. Russia has the world's 15th
highest patent application rate, the 8th highest concentration of high-tech
public companies, such as internet and aerospace and the third highest
graduation rate of scientists and engineers.
According to the British company BP (Statistical Yearbook 2018),
proven oil reserves in Russia at the end of 2017 were 14.5 billion tons,
natural gas was 35 trillion cubic meters. Gold reserves in Russia's
subsoil, according to the U.S. Geological Survey, were 5,500 tons at the end of
2017.
In 2019, the Ministry of Natural Resources estimated the country's mineral reserves in physical terms.
At the end of 2017, oil reserves were 9.04 billion tons, gas
reserves were 14.47 trillion cubic meters, gold reserves were 1,407 tons, and
diamonds reserves were 375 million metric carats. Then for the first time the
Ministry evaluated the mineral reserves of Russia in terms of value. The value
of oil reserves amounted to 39.6 trillion rubles, the value of gas amounted to
11.3 trillion rubles, coking coal amounted to almost 2 trillion rubles, iron
ore amounted to 808 billion rubles, diamonds amounted to 505 billion rubles,
gold amounted to 480 billion rubles. The combined value of all mineral and
energy resources (oil, gas, gold, copper, iron ore, thermal and lignite coal,
and diamonds) amounted to 55.24 trillion rubles (US$844 billion), or 60% of GDP
for 2017. The assessment occurred after the adoption of a new classification of
reserves in Russia and the object of the methodology was only those fields for
which a license was issued, so the assessment of the Ministry of Natural
Resources is less than the total volume of explored reserves. Experts
criticized such "an unsuccessful attempt to estimate reserves,"
pointing out that "one should not take such an estimate seriously" and
"the form contains an incorrect formula for calculating the value".
2022–present
Russia has
one of the world's lowest import dependence as a percentage of GDP among more
than 200 countries and territories over the past 30 years. Sanctions, boycotts
and disruption of supply chains in 2022 led to a drop of import from 20.7%
(top-15) to 15.6% (top-5).
In 2022, there have been heavy sanctions due to the Russian invasion of Ukraine that will likely result in steep recession. Since early
2022 many official economic statistics are not published. Sanctions also
included asset freezes on the Russian Central Bank, which holds $630 billion in foreign-exchange
reserves, to prevent it from offsetting the
impact of sanctions.
According to most estimates, every day of
the war in Ukraine costs Russia $500 million to $1 billion.
On 27 June 2022, Russia defaulted on
part of its foreign currency, its first such default since
1918.
In November 2022, it was reported that
Russia had officially entered a recession as the Federal
State Statistics Service had
reported a national GDP loss for the second consecutive quarter.
As part of the sanctions imposed on
Russia, on 2 September 2022, the finance ministers of the G7 group agreed to cap
the price of Russian oil and petroleum products, designed to allow Russia to maintain production, but limiting the
revenue from oil sales.
In 2022, the Economist calculated
that Russia did graduate into the category of high-income economies by 2022, if counted
at purchasing power parity rather than the exchange rate but could fall below
the threshold because of invasion of Ukraine.
In December 2022 in a study an economist at the Bank of
Russia's Research and Forecasting Department, finds that the import dependence
of the Russian economy is relatively low, does not exceed the median for other
countries and the share of imports in most industries is lower than in other
countries. The key explanation for this could be the low involvement of the
Russian economy in global value supply chains and its focus on production of
raw materials. However, 60% of Russia's imports come from the countries that
have announced sanctions against Russia.
TASS reported
poor results for the Russian economy for quarter 1 2023 with revenues of 5.7
trillion roubles – down 21% (mainly due to falling oil revenues), expenditure
8.1 trillion roubles – up 34% (mainly due to increased military costs),
creating a deficit 2.4 trillion roubles – ($29.4 billion)
Following Central Bank of Russia interventions, the exchange rate of rouble against the dollar
remained relatively stable in 2022, although in 2023 it started to decrease
significantly, reaching 97 RUB per 1 USD on 15 August 2023. Both the
interventions and the exchange rate decrease resulted in significant criticism
of the Central Bank by Russian state propaganda. Quarter 2 of 2023 saw a
13% fall in the value of the rouble against the dollar and a current account
surplus estimated in to be falling by 80% from the annual 2022 surplus of $233
billion.
After 11 years of negotiations, on 8 June 2023, in Sochi,
Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan
signed the Commonwealth of Independent States Agreement on Free Trade in
Services, Establishment, Operations and Investment to partly integrate Uzbekistan and Tajikistan on the common
standards of the WTO (General
Agreement on Trade in Services) and
the EAEU (some
provisions were borrowed from EAEU law) even without their membership in the
WTO (Uzbekistan) or the EAEU (Uzbekistan and Tajikistan). The Treaty on
the Eurasian Economic Union has preserved international agreements on trade in
services in the sphere of national competence of the member states therefore,
the EAEU is not a party to the agreement.
In August and September 2023, the Central Bank of Russia started
raising the key lending rate, ending up at 13% in September, while USD to RUB
exchange rate remained at 95 RUB. As of June 2023 share of Russia's
exports to EU dropped to 1.7% while Russia's imports from EU dropped to
1.5%. In October 2023 the "psychological barrier" of 100 RUB per
1 USD was crossed.
The 2024 budget expects revenues of 35 trillion rubles ($349
billion) with expenditure of 36.6 trillion, based on a Urals oil forecast of
$71.30 per barrel, a 90.1 rubles to 1 USD exchange rate and inflation of 4.5%.
Defense spending will double to 10.78 trillion, 29.4% of expenditure. Russia
currently has a record low unemployment rate of just 3 percent.
Currency and monetary policy
The Central
Bank of the Russian Federation follows inflation targeting policy. Typically devaluations of the ruble relative
to foreign currency strongly stimulate the export-oriented economy of Russia.
Debts
Russia is a creditor nation with
low national debt. In 2022, the share of external debt to GDP was 17%,
decreasing from 26.3% in 2021. Russia's external debt was estimated at
381.8 billion U.S. dollars as of 1 January 2023, down 20.8 percent from the
previous year. Russia External Debt reached 357.9 USD billion in March
2023, compared with 380.5 USD billion in the previous quarter.
National wealth fund
On 1 January 2004, the Government of Russia established the Stabilization
fund of the Russian Federation as
part of the federal budget with 10% of GDP set aside to balance it if price of oil falls.
Corruption
Russia was the lowest rated European
country in Transparency International's Corruption Perceptions
Index for 2020; ranking 129th out of 180
countries. Corruption is perceived as a significant problem in
Russia, impacting various aspects of life, including the
economy, business, public administration, law enforcement, healthcare, and education.
The phenomenon of corruption is strongly
established in the historical model of public governance in Russia and
attributed to general weakness of rule of law in Russia. As of 2020, the percentage of business owners
who distrust law enforcement agencies rose to 70% (from 45%
in 2017); 75% don't believe in impartiality of courts and 79% do not believe
that legal institutions protect them from abuse of law such as racketeering or
arrest on dubious grounds.
Energy
Until 2022
Russia was a key oil and gas supplier to much of Europe. Oil and gas exports, specifically, continue to
be the main source of hard currency.
Russia has large natural gas reserves, large coal reserves, large oil reserves, and
large oil shale reserves. It produces and exports natural gas, oil and coal.
Russia is a large electricity and nuclear energy producer.
Mining
Russia produces
and exports gold, diamonds, platinum, silver, copper, nickel, lead, bauxite,
zinc, vanadium, cobalt, iron, boron, molybdenum sulfur, phosphate, gypsum salt
and uranium, with state-owned ALROSA accounting for approximately 95%
of all Russian production.
Agriculture
Russia's agriculture sector contributes
about 5% of the country's total GDP, although the sector employs about
one-eighth of the total labor force. It has the world's third-largest
cultivated area, at
488,522 sq mi. However, due to the harshness of its environment,
about 13.1% of its land is agricultural, and only 7.4% of its land is arable. The main
product of Russian farming has always been grain, which occupies considerably more than half of the
cropland. Russia exports
wheat and produces of barley, buckwheat, oats, rye, sunflower seed. Fruits
and vegetables.
Russia maintains large fishing fleets and produced 4,773,413 tons of fish in 2018. It is also home to
the world's finest caviar (the beluga), and produces about one-third of all canned, fresh and frozen
fish.
The defense industry of
Russia is a strategically important sector and a large employer in the country.
Russia has a large and sophisticated arms industry, capable of designing and
manufacturing high-tech military equipment, including a fifth-generation fighter jet, nuclear powered submarines, firearms, and short range/long range ballistic missiles. It is the world's second-largest exporter of arms, behind only
the United States.
Aerospace
Russia
manufactures aircraft including commercial airliners and military aircraft,
helicopters and employs 355,000 workers. The Space industry of Russia consists
of over 100 companies and employs 250,000 people.
Automotive
Lada is a brand of AvtoVAZ, the largest Russian car manufacturer
in the Russian automotive industry. Aurus
Senat, a recent armoured
limousine project by NAMI
Automotive production employs around 600,000 people. Russia
produced 1,767,674 vehicles in 2018. Following the 2022 sanctions and the
withdrawal of Western manufacturers the production dropped to 450,000 passenger
cars in 2022,
The main local brands are light vehicle producers AvtoVAZ and GAZ, while KamAZ is
the leading heavy vehicle producer. In December 2022 the only foreign car
manufacturers are eleven Chinese carmakers that have production operations or
are constructing their plants in Russia.
Electronics
Russia was experiencing a regrowth of microelectronics, with the
revival of JCS
Mikron until sanctions took effect in 2022.
Retail
As of 2013, Russians spent 60% of their pre-tax income on
shopping, the highest percentage in Europe. This is possible because many
Russians pay no rent or house payments, owning their own home after
privatization of state-owned Soviet housing. Shopping
malls were popular with international investors and shoppers
from the emerging middle class. Russia had over 1,000 shopping malls in 2020,
although in 2022, many international companies left Russia resulting in empty
stores in malls. A supermarket selling groceries is a
typical anchor store in a Russian mall.
Telecommunications
In 2020, 85% of
Russia’s population were internet users. Russia produces mobile phones,
Transportation
Railway transport in Russia is mostly under the control of the state-run Russian Railways. The
total length of common-used railway tracks exceeds 54,157 mi. As of
2016, Russia has 1,452.2 thousand km of roads, Russia's inland waterways total 63,380 mi. Russia has 1,218 airports,
Construction
65% of Russians
live in apartments, 35% live in single family homes. 54% are reported to own
their property.
95.4 Rubles
equals $1. 1 Ruble equals $1 US cent. 0.9144 meters in 1 yard. 1 sq meter =
10.7639 sq ft.
In 2022, construction was worth $1.300 billion, 5% more than in
2021. Residential construction in 2022 reached 126.7 million square meters or
138.56 million sq yards. The 2020-2030 target for construction is 1 billion
square meters of housing or 9744 billion sq yards.
20% of all housing stock to be renovated and to increase space
from 27.8 square meters up to 33.3 square meters or 358 sq ft per person.
Information
technology
Russia has more
academic graduates than any other country in Europe with associate degree or
higher: 54%.
Russian software exports have risen from just $120 million
in 2000 to $3.3 billion in 2010. Since the year 2000 the IT market
has started growth rates of 30–40% a year, growing by 54% in 2006 alone. The
biggest sector in terms of revenue is system and network integration, which
accounts for 28.3% of the total market revenues. Meanwhile, the fastest
growing segment of the IT market is offshore programming.
The government has launched a program promoting construction of
IT-oriented technology parks that have an established infrastructure and enjoy
a favorable tax and customs regime, in seven different locations: Moscow,
Novosibirsk, Nizhny Novgorod, Kaluga, Tumen, Republic of Tatarstan and St.
Peterburg Region.
Under a government
decree signed in June 2013, a special
"roadmap" is expected to ease business suppliers' access to the
procurement programs of state-owned infrastructure monopolies, including such
large ones as Gazprom, Rosneft, Russian Railways, Rosatom, and Transneft. These companies
will be expected to increase the proportion of domestic technology solutions
they use in their operations.
Russian-based search engine Yandex is used by 53.8%
of internet users in the country.
Russian IT companies are ABBYY (FineReader OCR
system and Lingvo dictionaries), Kaspersky Lab (Kaspersky Anti-Virus, Kaspersky Internet Security), Mail.Ru (portal,
search engine, mail service, Mail.ru Agent messenger, ICQ, Odnoklassniki social
network, online media sources).
Economic integration
Russia joined the World Trade Organization (WTO) on 22 August 2012. Russia is a founding member of
the Eurasian Economic Union (EAEU) and is party to EAEU trade agreements with Vietnam,
Iran, Singapore, and Serbia. In 2018, the EAEU signed a trade cooperation
agreement with China. The EAEU provides for free movement of goods, services,
capital and labor. The EAEU has a Eurasian Customs Union and an integrated single market of 183 million people.
External trade and investment
Over the
past 30 years, the share of imports of goods and services as a share of
Russia's GDP has been below 25% for almost all years. The growth of oil rents,
rapid economic growth, economic integration, WTO accession, improved transport
accessibility and the government's import substitution program hardly changed
the percentage, and only sanctions and boycotts in 2022 led to a drop to 15.6%.
Trade
In 2015, Russia main exports are oil and natural gas (62.8% of
total exports), ores and metals (5.9%), chemical products (5.8%), machinery and
transport equipment (5.4%) and food (4.7%). Others include: agricultural raw
materials (2.2%) and textiles (0.2%).
Russia top exports in 2021 were: Crude oil $110.9b, Processed
oil $69.9b, gold $17.3b, coal $15.4b and natural gas $7.3b.
Russia top imports in 2021 were: Transmission equipment $10.7b,
medication $7.3b, tankers $3.7b, parts and accessories for data processing 3.7b
and storage units $3.3b.
In 2017, Russian Federation's commercial services' shares of
total exports and imports were 13.9% and 26.8%, respectively. Russian
Federation had a trade-to-GDP ratio of 46.6% in 2017. In 2013–2017, Russia
had a trade surplus for goods, and a trade deficit for services. The ratio of
Russia's goods trade (exports plus imports) to GDP has averaged about 40% in
recent years. In 2021, Russian exports totaled $492 billion in 2021, up 46%
from 2020.
Minerals, including oil and gas, accounted for almost 45% of
these exports. Goods imports increased 27% to $294 billion in 2021. Machinery
and mechanical appliances was the top import category, accounting for almost a
third of Russia's goods imports.
In services trade in 2020, Russia was a net services importer,
exporting $49 billion worth of services and importing $76 billion.
In 2021, imports of goods and services occupied 21.3% of the
Russian (GDP) and exports of goods and services occupied 30.9% of Russia's
GDP. Russia has trade-to-GDP ratio (trade openness) 49.26% which is lower than an average
of the countries.
Russia does not depend on the global supply chains and its focus
on production of raw materials. 60% of Russia's imports come from the countries
that have announced sanctions against Russia.
Mergers and acquisitions
Between 1985 and 2018, almost 28,500 mergers or acquisitions
have been announced in Russia. This cumulates to an overall value of around
$984B. Since 2010 value and numbers have decreased constantly and another wave
of M&A is expected. The majority of deals in, into or out of Russia have
taken place in the financial sector (29%), followed by banks (8.6%), oil and
gas (7.8%), and Metals and Mining (7.2%). The majority of the top 10 deals are
within the Russian Oil and Gas sector, followed by Metals and Mining.
Comments
Russia did well in
transitioning to a modern economy by allowing home ownership and industry to make it more self-sufficient.
It risks future development with the war in Ukraine and no incentives for
citizens to improve their skills, productivity and household incomes.
Cumulative Inflation and unemployment remain too high and household income at
$7,083 is too low.
Russia has a history of
expansion and contraction due to over-extension. The Eastern European countries
it absorbed after World War II became a burden and they contracted back to
pre-WW2 borders, but they gave away Ukraine, their bread-basket and warm weather
port. Now Putin wants Ukraine back to be a buffer to NATO.
Kiev was the first Capital of
Russia when the Rus established their rule in Russia in the 10th
Century AD.
Putin believed that giving up
Ukraine in 1989 was a mistake. I believe Ukraine will be better off in the EU.
It is not surprising that
Russia is now aligned with China, Iran, Syria and North Korea. They have
isolated themselves. If Trump wins in 2024, Russia is likely to end the war in
Ukraine and get ready to experience a drop in oil revenue as Trump increases US
oil and gas production.
Norb Leahy, Dunwoody GA Tea
Party Leader
