russia country report
TRANSCRIPT
MARKET RESEARCH COUNTRY REPORT
RUSSIA
CONTENTS
Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview
MAIN INDUSTRY SECTORS
Russia has a wealth of natural resources.
Russia is the leading producer of natural gas, and exporters of diamonds, nickel and
platinum and the second producer of oil in the world.
Russia has a relatively small amount of land suitable for agriculture because of
unfavorable climatic conditions.
Russia 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.
MAIN INDUSTRY SECTORS
Industry represents more than a third of Russia's GDP and employs up to 30% of the
population.
Russia 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.
Russia’s transport, communications and also trade sectors are particularly significant.
ECONOMIC OVERVIEW
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.
Russia’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.
ECONOMIC OVERVIEW
A stabilization fund has been set up to modernize infrastructures, education, health systems, and
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, is 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%.
FOREIGN DIRECT INVESTMENT [FDI]
FDI flow increased considerably at the beginning of the millennium years (tripled between
2002 and 2007), its level (1.5% of the GDP) remains relatively low in terms of growth of the
country and of the Russian economy's potential.
The low FDI performance reflects an investment climate which is still widely perceived as
unfavorable abroad.
Russia has implemented positive economic reforms, the state's administrative problems and
the uncertainties of the rule of law remain significant.
FDI GOVERNMENT MEASURES
Russian establishment of investment assistance is still in its infancy, despite many
declarations of intent.
Russia prefers to improve the general investment climate by tax reductions and
economic reforms.
Since May 2008, majority foreign ownership is subject to authorization in many
sectors, particularly those linked to raw materials, heavy industry and aerospace.
COUNTRY STRONG POINTS
Significant natural resources, investment potential largely under-utilized and a qualified
workforce.
COUNTRY WEAK POINTS
Russian’s unstable investment climate, complicated and sometimes contradictory accounting
regulations and legislations, infringement of intellectual property, many sectors closed to foreign
investment as considered strategic.
FOREIGN TRADE OVERVIEW
Russia 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.
Russian main trade partners are China, Germany, The Netherlands and the United States.
Russia 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.
RELATED RUSSIAREPORTS
Market Opportunities of products and Services in Russia
Export and investment sector opportunities in Russia
Overview of Trade Regulations, Customs and Standards in Russia
Russian Investment guide for beginners
Business and Project Financing in Russia
Business Travel Advisory in Russia
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