Currency: Russian ruble (RUB)
GDP nominal 2011:
Total: $1.857 trillion (9th)
Per capita: $13,089 (55th)
GDP (PPP) 2011:
Total: $3.015 trillion (6th)
Per capita: $21,246 (46th)
Population: 143,300,000 (2012)
Unemployment: 6,5% ( 2010)
GDP by sector: industries – 39.4%, agriculture – 7.2%, services – 53.4%
After the collapse of the Soviet Union, Russia languished through several years of chaos and unrest. It has now emerged as an economic and political powerhouse, a powerhouse full of opportunity for foreign investors and companies. However, do not attempt to do business in Russia unprepared. Socially, culturally, and economically, there are many significant differences between Russia and other countries of the world. If you ignore them, you do so at your peril…
Oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad. Since 2003, the exports of natural resources started decreasing in economic importance as the internal market strengthened considerably. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia’s GDP and the government predicts this will be 3.9% by the end of 2013.
The economic development of the country has been uneven geographically with the Moscow region contributing a very large share of the country’s GDP. Another problem is modernization of infrastructure, ageing and inadequate after years of being neglected in 1990s; the government has said $1 trillion will be invested in development of infrastructure by 2020. December 2011, Russia finally joined World Trade Organization, allowing it a greater access to overseas markets. Russia ranks the second most corrupt country in Europe (after Ukraine), according to the Corruption Perceptions Index.
Russia is a key oil and gas supplier for much of Europe. The country has the world’s largest natural gas reserves, the 8th largest oil reserves and the second largest coal reserves. Russia is the world’s leading natural gas exporter and second largest natural gas producer, while also the largest oil exporter and the largest oil producer. On 1 January 2011, Russia said it had begun scheduled oil shipments to China, with the plan to increase the rate up to 300,000 barrels per day in 2012.
Russia is the 3rd largest electricity producer in the world and the 5th largest renewable energy producer, the latter due to the well-developed hydroelectricity production in the country. Large cascades of hydropower plants are built in European Russia along big rivers like Volga. The Asian part of Russia also features a number of major hydropower stations, however the gigantic hydroelectric potential of Siberia and the Russian Far East largely remains unexploited.
Russia was the first country to develop civilian nuclear power and to construct the world’s first nuclear power plant. Currently the country is the 4th largest nuclear energy producer, with all nuclear power in Russia being managed by ROSATOM State Corporation. The sector is rapidly developing, with an aim of increasing the total share of nuclear energy from current 16.9% to 23% by 2020. The Russian government plans to allocate 127 billion rubles ($5.42 billion) to a federal program dedicated to the next generation of nuclear energy technology. About 1 trillion rubles ($42.7 billion) is to be allocated from the federal budget to nuclear power and industry development before 2015.
Russia is one of the most industrialized of the former Soviet republics. However, years of very low investment have left much of Russian industry antiquated and highly inefficient. Besides its resource-based industries, it has developed large manufacturing capacities, notably in machinery. Russia inherited most of the defense industrial base of the Soviet Union, so armaments are the single-largest manufactured goods export category for Russia.
Russia is experiencing a regrowth of Electronics.
Russia’s telecommunications industry is growing in size and maturity. As of 31 December 2007, there were an estimated 4,900,000 broadband lines in Russia.
The IT market is one of the most dynamic sectors of the Russian economy. Russian software exports have risen from just $120 million in 2000 to $1.5 billion in 2006. Since the year 2000 the IT market has demonstrated growth rates of 30-40 percent a year, growing by 54% in 2006 alone. Meanwhile the fastest growing segment of the IT market is offshore programming. . Such growth of software outsourcing in Russia is caused by a number of factors. One of them is the supporting role of the Russian Government. The Government has launched a program promoting construction of IT-oriented technology parks (Technoparks) – special zones that have an established infrastructure and enjoy a favorable tax and customs regime, in seven different places around the country: Moscow, Novosibirsk, Nizhny Novgorod, Kaluga, Tumen, Republic of Tatarstan and St. Peterburg Regions. Another factor stimulating the IT sector growth in Russia is the presence of global technology corporations such as Intel, Motorola, Sun Microsystems, Boeing, Nortel and others, which have intensified their software development activities and opened their R&D centers in Russia.
In its push to diversify Russia’s research and development in emerging technologies, The Putin government has announced a massive $7 billion investment program in nanotechnology. As part of the program, during 2007, $5 billion is being invested into a new state corporation, Rosnanotech, that will be responsible for overseeing and coordinating research in the area.
Russia is the world’s top producer of rye, barley, buckwheat, oats and sunflower seed, and one of the largest producers and exporters of wheat.
The total area of cultivated land in Russia was estimated as 1,237,294 km2 in 2005, the fourth largest in the world. In 1999–2009, Russia’s agriculture demonstrated steady growth, and the country turned from a grain importer to the third largest grain exporter after EU and USA. The production of meat has grown from 6,813,000 tons in 1999 to 9,331,000 tons in 2008, and continues to grow.
This restoration of agriculture was supported by credit policy of the government, helping both individual farmers and large privatized corporate farms, that once were Soviet kolkhozes and still own the significant share of agricultural land. While large farms concentrate mainly on the production of grain and husbandry products, small private household plots produce most of the country’s yield of potatoes, vegetables and fruits.
With access to three of the world’s oceans—the Atlantic, Arctic, and Pacific—Russian fishing fleets are a major contributor to the world’s fish supply. The total capture of fish was at 3,191,068 tons in 2005. Both exports and imports of fish and sea products grew significantly in the recent years, reaching correspondingly $2,415 and $2,036 million in 2008.
Russia has more than a fifth of the world’s forests, which makes it the largest forest country in the world. However, according to a 2012 study by the Food and Agriculture Organization of the United Nations and the Government of the Russian Federation, the considerable potential of Russian forests is underutilized and Russia’s share of the global trade in forest products is less than four percent.