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Economy of Russian

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Economy of Russian

Russia has an upper-middle income[25] mixed economy with state ownership in strategic areas of the economy. Market reforms in the 1990s privatized much of Russian industry and agriculture, with notable exceptions to this privatization occurring in the energy and defense-related sectors.

Russia’s vast geography is an important determinant of its economic activity, with some sources estimating that Russia contains over 30 percent of the world’s natural resources.[26][27][28] The World Bank estimates the total value of Russia’s natural resources at $75 trillion US dollars.[29][30] Russia relies on energy revenues to drive most of its growth. Russia has an abundance of oil, natural gas and precious metals, which make up a major share of Russia’s exports. As of 2012 the oil-and-gas sector accounted for 16% of GDP, 52% of federal budget revenues and over 70% of total exports.[31][32] Russia is considered an “energy superpower”.[33][34] It has the world’s largest proven natural gas reserves and the largest exporter of natural gas. It is also the second-largest exporter of petroleum.

Russia has a large and sophisticated arms industry, capable of designing and manufacturing high-tech military equipment, including a fifth-generation fighter jet, nuclear powered submarines, firearms, short range/long range ballistic missiles. The value of Russian arms exports totalled $15.7 billion in 2013—second only to the US. Top military exports from Russia include combat aircraft, air defence systems, ships and submarines.[35][36]

In 2015, the Russian economy was the sixth largest in the world by PPP and twelfth largest at market exchange rates. Between 2000 and 2012 Russia’s energy exports fueled a rapid growth in living standards, with real disposable income rising by 160%.[37] In dollar-denominated terms this amounted to a more than sevenfold increase in disposable incomes since 2000.[38] In the same period, unemployment and poverty more than halved and Russians’ self-assessed life satisfaction also rose significantly.[39] This growth was a combined result of the 2000s commodities boom, high oil prices, as well as prudent economic and fiscal policies.[40] However, these gains have been distributed unevenly, as the 110 wealthiest individuals were found in a report by Credit Suisse to own 35% of all financial assets held by Russian households.[41][42] Russia also has the second-largest volume of illicit money outflows, having lost over $880 billion between 2002 and 2011 in this way.[43] Since 2008 Forbes has repeatedly named Moscow the “billionaire capital of the world”.[44]

The Russian economy risked going into recession from early 2014, mainly due to falling oil prices, sanctions, and the subsequent capital flight.[45] While in 2014 GDP growth remained positive at 0.6%,[46] in 2015 the Russian economy shrunk by 3.7% and was expected to shrink further in 2016.[47] However, the World Bank and the IMF estimated that Russia’s economy will begin to recover by 2017.[48][49] By 2016, the Russian economy rebounded with 0.3% GDP growth and is officially out of the recession. The growth continued in 2017, with an increase of 1.5%.

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