Business Environment in Russia
Russia was hit hard by the international financial crisis and in 2009 reached a record recession since the fall of the Soviet block (-7.9%). The recovery in 2010 was strong (4% growth according to estimates), driven by fuel exports and domestic demand stimulated by the increase in salaries. Growth should continue to strengthen in 2011-2012.
Economic recovery justifies the end of exceptional measures to combat the crisis. The government’s priority, announced as part of a Five Year Plan, is to support the agricultural sector in order to achieve food self-sufficiency. In order to free itself of its dependency on hydrocarbons, a change of the economic model is imperative. Tax reductions have been planned for the next few years, in order to favor the diversification of the economy through investment while, regaining some balance. A stabilization fund has been set up to modernize infrastructures, the education and health systems, as well as agriculture. Cuts in public spending and a strengthening of the supervision of the banking system are also planned. The main threats to growth are linked to controlling inflation, which remains high and in the long term, to the drop in population.
The unemployment rate, which dropped in the recent years, has risen as an effect of the crisis and is now estimated at 7.5% for 2010. Disparities are still marked, particularly between big cities and rural areas. Despite the appearance in towns of a middle class, the poverty rate is still at 16%.
|GDP (billions USD)||1,222.33||1,465.08e||1,894.47||2,197.71e||2,403.03e|
|GDP (Constant Prices, Annual % Change)||-7.8e||4.0e||4.8||4.5||4.3|
|GDP per Capita (USD)||8,614||10,437e||13,543||15,765||17,296|
|General Government Balance (in % of GDP)||-3.5||-1.8e||-0.6||-1.3e||-1.7e|
|Inflation Rate (%)||11.7||6.9||9.3e||8.0e||7.1e|
|Unemployment Rate (% of the Labor Force)||8.4||7.5e||7.3e||7.1e||7.0e|
|Current Account (billions USD)||47.51e||77.57e||80.34||69.54e||-|
|Current Account (in % of GDP)||3.9e||5.1e||4.6||3.5e||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
Russia has a wealth of natural resources. It is the leading producer of natural gas and the second producer of oil in the world, as well as being one of the main producers and exporters of diamonds, nickel and platinum.
Despite its surface area, Russia has a relatively small amount of land suitable for agriculture because of unfavorable climatic conditions. The country nevertheless owns 10% of the global agricultural lands. The northern regions of the country concentrate mainly on livestock and the southern regions as well as western Siberia produce cereals.
Industry represents more than a third of Russia's GDP and employs up to 30% of the population. The country inherited most of the Soviet Union's industrial bases. The most well developed sectors are chemicals, metallurgy, mechanical construction and defense sectors.
The service sector employs more than 60% of the population and generates slightly under 60% of the GDP. After the 1998 financial crises, the banking sector has not yet undergone a complete restructuring. Given the size of the country, the transport, communications and also trade sectors are particularly significant.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||9.0||29.2||61.8|
|Value Added (in % of GDP)||4.7||32.8||62.5|
|Value Added (Annual % Change)||0.2||-10.8||-5.4|
Source: World Bank - Last Available Data.
|Russian Rouble (RUB) - Average Annual Exchange Rate For 1 USD||28.28||27.19||25.58||24.85||31.74|
Source: World Bank
Indicator of Economic Freedom
- Mostly unfree
- World Rank:
- Regional Rank:
Foreign Trade in Figures
The country is fairly open to foreign trade (which represents around 50% of the GDP) despite the nationalistic attitude of its leaders and strict legislation and fare policies. Russia is amongst the 10 primary exporters and the 20 primary importers in the world. Its main trade partners are China, Germany, The Netherlands and the United States. The country shows a high trade surplus and this should continue regardless of the drop in raw material prices and the deterioration of the global economic situation.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||164,281||223,486||291,861||191,803||248,397|
|Exports of Goods (million USD)||303,551||354,403||471,606||303,388||400,018|
|Imports of Services (million USD)||43,679||56,768||73,616||59,241||69,879|
|Exports of Services (million USD)||30,866||38,960||50,527||41,068||43,702|
|Imports of Goods and Services (Annual % Change)||21.3||26.2||14.8||30.4||-|
|Exports of Goods and Services (Annual % Change)||7.3||6.3||0.6||-4.7||-|
|Imports of Goods and Services (in % of GDP)||21.0||21.5||22.0||20.4||-|
|Exports of Goods and Services (in % of GDP)||33.7||30.2||31.2||27.7||-|
|Trade Balance (million USD)||139,269||130,915||179,742||111,585||-|
|Trade Balance (Including Service) (million USD)||125,656||111,270||154,692||-||-|
|Foreign Trade (in % of GDP)||54.7||51.7||53.2||48.1||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|Other partnersClose extended list||65.9%|
(% of Imports)
|Other partnersClose extended list||54.0%|
Sources of General Economic Information
Ministère de l'Agriculture
Ministère du Développement économique et du Commerce
Ministère des Affaires étrangères
Ministère des Finances
- Statistical Office
- Central Bank
Russian Central Bank
- Stock Exchange
Russian Trading System
Moscow Interbank Currency Exchange
- Search Engines
Russia on the Net
Radio Free Liberty
- Economic Portals
- Executive Power
- The President is the Head of State. He is elected by universal suffrage for four years.The real center of power in the country, he is the commander-in-chief of the army. The Prime Minister is the head of the government. He is appointed by the President, with the approval of the lower house of Parliament, and manages the everyday business of the country.
- Legislative Power
- Russia has a two-chamber legislative power. The Parliament, called the Federal Assembly, is composed of: the Council of the Federation (upper chamber), which has 78 seats and the members are appointed by the regional governors and legislative institutions, for a four-year term of office; and the State Douma (lower chamber), which has 450 seats; its members are elected by direct universal suffrage from partisan lists, for a four-year term.
- Main Political Parties
- Russia is a State with one dominant party -
United Russia (a centrist party) which is in power. Opposition parties are authorized but they do not really have any chance of gaining power. The other important parties in the country are:
- The CPRF (Communist Party of the Russian Federation) – a nationalist and communist party;
A Just Russia (born of the merger between Rodina, the Russian Life party and the Russian Pensioners' party in 2006) - a center-left party, an ally of United Russia;
The LDPR (Liberal Democratic Party of Russia) - an extreme right nationalist political party;
- The SPS (Union of right-wing forces) - associated with reforms leading towards the free market economy and privatization, it supports western-style capitalism.
- Current Political Leaders
- President: Dmitri MEDVEDEV (elected on May 2008) – Independent
Prime Minister: Vladimir PUTIN (since May 2008) – Last president. United Russia Party President.
- Next Election Dates
- Presidential election: March 2012
Parliamentary: December 2011
Indicator of Freedom of the Press
- World Rank:
- 12 places down compared to 2008
Indicator of Political Freedom
- Not Free
- Political Freedom:
- Civil Liberties:
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