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2019/08/18 10:38:59

Economy of Russia

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Content

Up-to-date data in recent years are provided in this article. Process of economy of Russia earlier in article the Economic history of Russia.

Key indicators

Comparison since 1999

Comparison since 1988

How at approximately same indicators by the majority of types of products at the modern Russian Federation and RSFSR in 2019 commodity abundance is observed?

If to speak about the industry then two main factors. The first – ceased to support huge army and military industrial complex. At peak in the USSR there was an army in 4-4.3 million people, in 2018 – to 1 million. On army at the USSR about 8-9% of GDP a year, now – 3.6% left. In transfer to our money, it as now instead of 4 trillion budgeted expenses would be 8.5-9 trillion.

The second factor – inclusion of Russia in globalism. Refused many inefficient productions, having replaced them with import. First of all electronics (from smartphones and computers to home appliances), light industry and so forth consumer goods.

Generally, whatever one may do, convergence and our defeat in Cold War can and "the main geopolitical accident" for someone, but for ordinary people all this was the benefit. And only, it seemed – it was just necessary to cease to butt a horn with the West.

The second part of a question – on food. Here too "worked out the market". In the USSR the same grain about 5 million tons decayed (and in general up to 5-10% of products). In 2018 all farmland put into circulation has an owner. Plus of the Russian Federation reset such outskirts as Central Asia and the Caucasus (more than 60 million people) from feeding. Besides globalism – abroad food Russia buys plus in 2018 for $30 billion a year (before import substitution there were $43 billion).

In general, as it became clear, even a little freedom for a private initiative changed the country. Now 30-40%, other 60-70% little effective state capitalism – or sitting on the Soviet backlog (oil, gas, other natural minerals, transport), or eating the activity in minus are the share of competitive, market economy in Russia (the same military industrial complex; for example, more than 250 billion rubles are long only one Ural Carriage-Building Plant).

It is possible to imagine to what growth the Russian economy will go if its market part is 50%. Yes plus to it to add fair courts, firmness of a private property, public control over state corporations, etc.

GDP loudspeaker

Main article: GDP of Russia

Correlation of GDP of Russia and prices of oil
Correlation of GDP of Russia and prices of oil

The number of the companies and bankruptcies in Russia

Entrepreneurs and managing directors of state assets

Business community of Russia for December, 2018
Business community of Russia for December, 2018

Billionaires

Small and medium business

Branches of the economy

Industry structure of 500 largest companies of Russia at the end of 2014.

The card of property of 500 largest companies of Russia at the end of 2014 is given below.

The largest companies

Industrial production

Main article: Industrial production in Russia

Dynamics of industrial production in Russia 2005-2015, %

Industries

Military industrial complex

The enterprises of military industrial complex of Russia are "starved" and need the large-scale program of debt relief, the Deputy Prime Minister Yury Borisov said in July, 2019. According to him, total portfolio of the credits to defense sector exceeds 2 trillion rubles, and service of these loans costs 200 billion rubles a year.

But this digit "fights" with a target profit of the enterprises of military industrial complex, Borisov emphasized. As a result the defense plants making real products are forced to give all earnings to banks, "which do not make anything", the Deputy Prime Minister was indignant.

"The main body of the credit will not be never extinguished any more", - he complains. If to write off a third of debt - 600 billion or 700 billion rubles, then defense sector will be able to save about 70 billion rubles a year on service of loans and to invest more than 1 billion dollars in production expansion of production of weapon or diversification.

Extraction of silver

Data for 2018.
Data for 2018.

Trade

Pharmaceutics

Main article: Pharmaceutical market of Russia

Digital economy

Main article: Digital economy of Russia

Mobile economy

Main article: Mobile economy of Russia

Small business

Main article: Small business of Russia

Investments

2019: Plan of improvement of the investment climate for 12 directions

On January 17, 2018 the Government of the Russian Federation approved the plan under the name "Transformation of Business Climate". The plan is directed to improvement of the investment climate in 12 directions [1] (in more detail).

2017

Investment volume into fixed capital grew by 4.4%

At the end of 2017 the investment volume into fixed capital grew by 4.4% in annual terms. In general, commenting on growth of investments into fixed assets, it is possible to speak not only about growth, but also about structural adjustment of the investments. It is necessary to consider that the considerable share of internal investments was provided earlier by the enterprises of an oil and gas sector which were forced to contract or freeze a part of projects in connection with deterioration in an economic and political environment. At the same time in 2017 growth petrogas of the sector was recovered in parallel with growth of investments into the import-substituting industries and in general to the non-oil sector.

Surge in investments into bonds

Only for the last week of January, 2017 of EU country invested 140 million dollars of the investment capital in the Russian bonds. It became a peculiar record in three years — practically for the entire period of the beginning of sanctions and countersanctions. It is remarkable that since the end of 2016 the economy of the Russian Federation received about 700 million dollars of foreign injections.

Recently strong indications of "thaw" in respect of the investment climate in Russia are noticeable. Among the reasons of it experts call increase in prices for oil and some perspectives of improvement of the Russian-American relationship designated later Donald Trump's elections as the U.S. President. Besides, in the European Union voices of discontent with sanctions measures against the Russian Federation sound more actively. According to numerous forecasts, positive trends will remain. It can be also promoted by decrease of the inflation rate and gradual reduction of a rate by the Central Bank.

2013: The first half of the year of +32%

Inflow of the foreign investments to economy of the Russian Federation in the first half of the year 2013 grew by 32.1% in comparison with the same period of last year, including straight lines — for 59.8% (Rosstat).

At this balance of investments (minus investments abroad) it developed investments into Russia negative — 27.6 billion dollars.

Receipt of the foreign investments to Russia made 98.795 billion dollars, of them the direct foreign investments — 12.139 billion dollars (12.3% of the total amount of receipts). The Russian investments abroad in the first half of the year grew by 1.8 times, having reached 126.4 billion dollars.

"As of the end of June, 2013 the saved-up foreign capital in economy of Russia was 370.6 billion US dollars that is 10.7% more in comparison with the corresponding period of previous year", said in materials of Rosstat.

The largest specific weight in the saved-up foreign capital fell on the other investments performed on a returnable basis — 66.9% (for the end of June, 2012 — 59.0%), the share of direct investments made 31.2% (38.5%), portfolio — 1.9% (2.5%)[1].

2012:-14.4% for the first 9 months

The volume of the foreign investments which came to Russia for the first nine months 2012 was 114.5 billion dollars that is 14.4 percent less, than for the same period the previous year. It is reported in materials of Rosstat.

At the same time the volume of the extinguished investments, i.e. that which at first came to the country, and were displaid then, was 99.7 billion dollars. Thus, the volume of net investments in the Russian economy in nine months was 14.8 billion dollars.

Leaders in investment into the Russian Federation appeared:

  • Holland (15.7 billion dollars),
  • Cyprus (11.8 billion dollars) and
  • Great Britain (10.6 billion dollars).

In general as of the end of September, 2012 the saved-up foreign capital in the Russian economy grew by 9.3 percent to 353.3 billion dollars.

The Russian investments abroad, on the contrary, grew: in January-September from the Russian Federation 109.4 billion rubles abroad are directed, the extinguished investments made 101.3 billion dollars of them. Both the directed, and extinguished investments grew on average by 13 percent. The volume of the investments which are saved up abroad for the end of September, 2012 was 119.2 billion dollars of Russia. Leaders in attraction of the Russian investments are:

  • Switzerland (38.6 billion dollars),
  • Austria (14.5 billion dollars) and
  • Cyprus (10.8 billion dollars).

  • In October, 2012 speaking at the investment forum "Russia Calls!", the president Vladimir Putin said that by 2015 the investment volume into the Russian economy should grow to 25 percent of GDP, and by 2018 - to 27 percent of GDP. For comparison, at the end of 2011 the investment volume into the Russian Federation, according to Rosstat, exceeded 190 billion dollars (5.7 trillion rubles at the rate of for the beginning of 2012). Considering that GDP of the country was 54.369 trillion rubles, investments not much more exceeded 9.5 percent of GDP.

  • In July, 2012 in the report of the United Nations Conference on Trade and Development (United Nations Conference on Trade and Development, UNCTAD) increase in investment volume into the Russian economy and also increase in its attractiveness for the foreign companies is noted. Experts of UNCTAD state close to record growth of investment flows to Russia.

On survey results of UNCTAD, Russia divided with Germany the eighth place in the list of the states where global corporations in 2012-2014[2]are going to invest ].

Image:В какие страны планируют инвестировать иностранные корпорации 2011.JPG
  • In October, 2011 in Ernst & Young expected increase in inflow of investments in Russia, despite many concerns, connected with weakening of world economy in general. Within the last six months inflow of investments restrained the political instability which followed the solution of the president Medvedev to dismiss a number of key officials. However, considering the elections which are coming in December, 2011, the situation should be stabilized, and growth of investments in 2012 should be 9% in comparison with 2.3% in 2011.

Image:Наиболее привлекательные регионы для открытия бизнеса Ernst and Young 2011.png

Foreign trade

Financial system

Balance of payments of Russia

The balance of payments of the country - a ratio of the money payments coming to the country from abroad with payments abroad during certain time (year, quarter, month).

The difference between income and an expense of the country makes balance of the balance of payments. The balance can be positive or negative. In the latter case there is a deficit of the balance of payments, i.e. the country spends abroad more, than receives from the outside. It can have an adverse effect on rate stability of national currency.

In balance select two sections (account): account (balance) of current transactions and account (balance) of capital movement.

The account of current transactions includes:

  • 1) a trading balance (cumulative payments to the country / from the country on export and commodity import);
  • 2) balance of services (trade in services, payment of foreign transportations, tourism, sale and purchase of patents and licenses, international insurance);
  • 3) balance of transfers (money transfers, a property income abroad (percent, dividends, profit), interest payment on foreign loans and the credits, free aid).

The balance on the account of current transactions represents an export indicator from the country (NE). The balance is positive if export exceeds import.

2015: Positive balance of $65.8 billion (+12.7%)

In 2015 the positive account balance of current transactions of the balance of payments of Russia made $65.8 billion that is 12.7% more, than in 2014 ($58.4 billion), the Bank of Russia reports.

"The growing surplus of the current account became result of significant reduction of a negative deposit of balance of services and investment revenues, including due to reduction of payments on service of an external debt in the conditions of decrease in total amount of debt to nonresidents", - the Central Bank notes.

At the same time the surplus of the account of current transactions grew in the IV quarter 2015 by 73.3% to $13.0 billion against $7.5 billion in the III quarter.

Meanwhile the negative balance of the financial account (without reserve assets) was reduced in 2015 more than twice to $61.1 billion against $130.2 billion in 2014. In the IV quarter 2015 the indicator was $3.1 billion against $2.4 billion in the III quarter.

National currency

2019

The volume of rubles is equal in the address to 150 billion dollars

The offer of gold as of August, 2019, makes 8.7 trillion dollars, the offer of US dollar of 1.7 trillion dollars. The volume of rubles in the address is 150 billion dollars.

thum
​ Amount of money in the address (in US dollar). Data for 2019]]
The ruble is underestimated for 65%

In July, 2019 the Economist magazine published the index of Big Mac. Proceeding from the sandwich price in the different countries of the world and currency rate authors of a research found out fair value of U.S. dollar.

According to a research it turns out that currency rate of ruble is 64.5% higher than the actual cost of the Russian currency. It is more than at the Ukrainian hryvnia, Romanian leu, the South African rand and Malaysian ringgit.

Authors specify that if in the USA Big Mac costs $5.74, then in Russia – 130 rub or is slightly more than $2.

2013: Devaluation acceleration

Since the end of 2012 on August, 2013 the ruble lost about 9% to an equilibrium basket from dollar and euro, conceding only to the South African rand (easing for 22%), to Brazilian real (-20%), Indian rupee (-18%) and Turkish lira (-12%).

But for all post-crisis period (since the end of 2009 on August, 2013) the ruble sank only for 5% against decline by 35-36% of the South African rand and Brazilian real, by 33% - Indian rupee, for 27% - Turkish lira and for 6-14% - currencies of CEE. So correction of ruble in 2013 only compensates its stability[3] before[3].

Federal budget

International (gold and exchange) reserves

Main article: International (gold and exchange) reserves of Russia

The international reserves represent the highly liquid financial assets which are at the disposal of the Bank of Russia and Government of the Russian Federation. They consist of assets in foreign currency, monetary gold, special drawing rights (SDR, special drawing rights, - the settlement monetary unit used by the International Monetary Fund, the IMF), a reserve position in the IMF and other reserve assets.

National welfare fund

Inflow/capital outflow

Main article: Inflow and capital outflow from Russia

According to the Bank of Russia, the capital outflow during the period from 1994 to 2016 made nearly $675 billion[4] of the country[4].

Key interest rate of the Central Bank

Main article: Central Bank of Russia

Image:Ключевая ставка ЦБ России 2005-2015.jpg

Debt (state, external, internal)

Main article: Debt of Russia

Money supply

The amount of money supply in the address (Sq.m) in Russia, billion rubles. Given on the middle of 2019.
The amount of money supply in the address (Sq.m) in Russia, billion rubles. Given on the middle of 2019.

Accumulation of money can serve as the reason of increase in currency circulation. Because of it it is necessary to release more means of payment. Increase in money supply in the Russian economy is one of the main factors of inflation in Russia.

Inflation

2019

2015

2013: 6,5%

Inflation in 2013, according to preliminary estimates Rosstat, was 6.5 percent. On December 31 it is reported on the website of the department. Data are obtained on the basis of price analysis on 64 types of the main goods and services in 271 Russian cities.

Shrinkflyation

Credit ratings

The S&P agency began to rank the Russian Federation in 1996 at the request of the state. The Russian government pays rating services S&P and can refuse them at any time. How many Russia pays for services S&P, it is precisely unknown.

At S&P there are also sovereign rankings which the agency maintains voluntarily, without receiving money from the issuer (unsolicited ratings). Free sovereign ratings minority: on a "non-commercial" basis, for example, the ratings of the United States, Great Britain, Germany, France, Japan are conducted.

Since 2004 all three main rating agencies (S&P, Moody's and Fitch) maintain the sovereign rating of Russia within so-called investment category.

At the beginning of 2014 economists of Heidelberg University in Germany Andreas Fues and Kaj Goering in the academic research made a hypothesis that rating agencies are not objective similarly to all sovereign borrowers: they are more favorable to the countries of the basing (for S&P it is the United States). In reply S&P said that it does not agree with the statement of scientists.

Investors are not inclined to attach great value to actions of rating agencies, Bloomberg claims. The analysis of rating actions of Moody's and S&P from 1970th and the documented market reaction on each of these actions shows that approximately in half of cases of quotation of government bonds changed not in that direction which was dictated by logic of rating action. A classical example - historical lowering the U.S. credit rating in August, 2011 by the S&P agency: then investors did not begin to reset the American state papers, on the contrary, their price grew, and profitability decreased to record values.

Banking system

Payment systems

Private investments

Crediting

Insurance market

Main article: Insurance (market of Russia)

Doubtful operations on cashing in

According to the Central Bank for September, 2019, the volume of doubtful operations on cashing in decreases.

Labor market

At the beginning of the 2010th the World Bank allowed three scenarios of reduction of the population of Russia of working-age.

Image:Население России трудоспособного возраста 1991-2030 (прогноз 2014 Всемирный банк).PNG

Several separate articles are devoted to labor market on TAdviser:

Consumption in Russia

Positions of Russia in ratings

Participation in the international organizations

WTO

The protocol on the entry of Russia into the World Trade Organization was signed on December 16, 2011. The country was included into trade club after 18 years of negotiations. In more detail about agreements of Russia with the WTO read in article the World Trade Organization (WTO).

Economic cooperation with other countries

Debtors of Russia

In total for September, 2019 17 countries of the world are debtors of Russia with the total amount of debts nearly 27 billion dollars.

The largest debtors of Russia for September, 2019
The largest debtors of Russia for September, 2019

On the first place Belarus from 7.6 billion dollars, Ukraine and Venezuela from 3.7 and 3.5 billion, Cuba 3.2 and also Bangladesh 2 billion.

Debt relief

The coma and what debts were remitted by Russia for August, 2019.
The coma and what debts were remitted by Russia for August, 2019.

Among the countries of members of "Group of Eight" by 2019 Russia became the leader in quantity of cancelled debts.

The biggest debtors:

  • Cuba ($31.7 billion). In 2014 the Russian government wrote off 90% from amount of debt in 35.2 billion dollars.

  • Iraq ($21.5 billion) Russia wrote off debts to this country twice – in 2004 $9.5 billion from $10.5 billion and in $2008 12 billion from $12.9 billion. The second write-off is made already on a new debt of modern Russia, in hope that the interests of the Russian companies in Iraq will be considered.

Notes