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The Russian Economy: Prospects
Review
The year 2009 was a dramatic, jarring year for the global economy. Just on time for the end of the first decade of the new millennium, a positive trend is fortunately becoming noticeable. The Russian economy appears to be on the path to recovery:
"There are positive trends. Demand for investments increase, the retail trade is becoming more active. Since June 2009 the Gross Domestic Product is on the rise once more. The macro-economic situation of the country remains stable; this year the inflation will be at the lowest level since 1992 with less than nine percent. In addition, foreign investments are on the upswing, the exchange rate of the Rubel is solidifying, the foreign currency reserves are growing and currently stand at 447 billion US$", as Putin stated on December 7th of 2009.
Because of the reduced investment activity in 2009, however, the Russian industry - in international comparison - falls further behind the technological standard. The crisis thus demonstrates once again the need for modernisation and diversification of the Russian economy. Such modernisation can only succeed with the help of foreign enterprises.
Source: Russland Aktuell, Issue 51/52/2009
Preview: Modernization of the Russian Economy
Local machines are rarely competitive in the global market; they have clear productivity disadvantages in comparison with western models, generally use more resources and are more prone to break downs. In after-sales-service the Russian suppliers also lag behind their foreign competitors.
If Moscow intends to realise its ambitious development plans to be part of the five largest industrial nations by 2020, it has to promote the importation of modern machines and equipment.
The Newspaper "Russland Aktuell" - in its issue of 7/2010 - wrote on the subject:
The dependence of Russia on raw material exports must be eliminated and the research- and industrial potential of the country must be modernised, said President Medvedev on February 11th in an economic advisory meeting with large corporations in the Siberian city of Tomsk. An economy that remains committed to its raw material inventory has no future. The Russian economy needs new technologies and a larger share of innovation in the investment programs, so spoke Medvedev.
Corresponding legal foundations are being worked out at this time.
Down mood has been overcome
According to an opinion poll with 206 German companies by the German-Russian Chamber of Foreign Trade, these enterprises alone intend to invest around 780 million Euro in 2010.
"The down mood has been overcome. German corporations in Russia are now vying for the right position in a budding recovery" says Rainer Lindner, Managing Director of the Committee East of the German Economy.
Advantages of the Russian Market
Need for reform of the Russian market
Source: Study Business Climate 2009, 7th survey of the German-Russian Chamber of Foreign Trade (AHK) and of the Committee East of the German Economy. More detailed information is available at:: http://russland.ahk.de
Russia’s Strengths and Opportunities
Russia's Strengths
- Large domestic market
- Free-spending consumers
- Regional development
- High foreign currency reserves
- Stabilization fund
- Well-regulated State finances
Political stability
Russia's Opportunities
- Further diversification of the Russian economy
- Growing middle class
- In the medium-term increasing foreign investments
- Relatively low cost of labour
- Booming areas (e.g. Sochi as venue for the Winter Olympics 2014)
- Multibillion target programmes , (among them in transportation, water management, exploitation of the Northern Ural)
- Priority project: energy efficiency (goal: savings of 40% by 2020)
Source: Economic trends Russia, turn of the year 2009/10, Germany Trade & Investment 8.12.09
