Market Opportunity 

With a population of 142 million, Russia is the largest country in the world and ninth largest by population. Since the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have strengthened economic growth. An article by RIA Novosti states it has the world’s eighth largest GDP of $1.757 trillion. Russia ended 2008 with GDP growth of 6.0%, following ten straight years of growth averaging 7% annually since 1998. However, the drop in oil prices of oil has affected growth as of late. The purchasing power parity per capita is $15,800.

During the past decade, poverty and unemployment declined steadily and the middle class continued to expand. The unemployment and inflation rate is currently 6.2% and 13.9%, respectively (CIA Factbook). MSN cites that the average salary in Russia was $640 per month in early 2008, up from $80 in 2000. At the moment, Russia has the highest disposable income among emerging markets – around 87% of per capita income (PBN).

Russia’s currency is the Ruble which is now equal to 0.031578 USD ( Analysts from Forex News do not believe that the ruble may return to appreciation while the oil prices decline. The current price levels are already critical, and they will certainly continue to press on the Russian currency. The Bank of Russia continues to spend the national foreign reserves to keep the currency from depreciating too fast, meanwhile, gradually lowering its benchmark rate.

Best Industry Segments

Encarta Encyclopedia labels Russia as an energy  Ukraine updates   superpower because it has the world’s largest natural gas reserves, the second largest coal reserves, and the seventh largest oil reserves. CIA Factbook cites that oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia’s GDP. The government predicts this will drop to 3.7% by 2011 reports RIA Novosti. Other exports from Russia are transportation and communications equipment, agricultural machinery, electric power generating and transmitting equipment, medical and scientific instruments, and textiles.

Russia has extensive business connections around the world, importing from: Germany 13.3%, China 12.2%, Ukraine 6.7%, Japan 6.4%, US 4.8%, Belarus 4.4%, South Korea 4.4%, and Italy 4.3% according to the US Department of State. With regard to exports, the country sells to global partners: Netherlands 12.2%, Italy 7.8%, Germany 7.5%, Turkey 5.2%, Belarus 5%, Ukraine 4.7%, and China 4.5%.

Russia aims to become a major energy sup¬plier and provider of raw materials to countries of the Asia-Pacific region, including China, Japan, South Korea, and the United States. Such a goal, if accomplished, will greatly enhance Russian lever¬age in the Pacific Rim.


Leave a Reply

Your email address will not be published. Required fields are marked *