The Russian economy’s performance in the year 2012, especially When the global conomies were going through the tough economic situation and were hit back by the effects of the crisis, Russian economy managed to sail through. According to World Bank , Russian economy grow 3.4 percent in 2012 , down from 4.3 percent in 2011. In 2013 the growth is expected to be 3.3 percent and it is projected to be 3.6 percent in 2014.
In the year 2012 Russian economy received 128 FDI projects, same as the year 2011, but significantly lower than 2008-2009. The slow speed of institutional reforms and lack of improvement in the business environment can exaggerate the problem of falling levels of FDI. Inspite of all this, the year in which all other economies were witnessing falling FDI, Russian economy managed to secure a stable number of FDI projects.
An expansionary fiscal policy prevailed in 2012, although the increase in expenditures was lower than the planned increase and the federal Budget was near to balance. Based on the premises of newly developed and adopted fiscal rules and the medium term budget.The government foresees a moderate fiscal consolidation up-to 2015.
Key Performance highlights 2012-2013
• Russia climbed up eight places and reached 112nd position in the World Bank’s 2013 Doing Business ranking , up from 120th in 2012.
• Russia became 156th member of WTO.This is a noticeable development in its integration with the world economy.
• Russia is building Skolkovo innovation Center near Moscow. It is hoped that this will render researchers, innovators and investors with a solid platform to emphasize on IT, NUCLEAR technologies and other areas.
• The Prime Minister of Russia announced plans to join the Open Government Partnership (OGP). So it can be said that Russia is all set to collaborate with other more transparent, effective and accountable governments.
• Russian economy has always been surmounted by the problem of the outflow of capital for many years due to several reasons such as corruption,political risks etc.A further fall in the capital flight is expected in 2013 to US $ 10million.
|Year||GDP % Change||Inflation % Change||Year||GDP % Change||Inflation % Change|
Source: World Bank
Russian Government is planning to set up establishments of special tax regime in some other territories especially in the Far -East, which will serve as a domestic offshore zone. This will hinder capital flight and will also support in procuring more of inward investment.
Exports of energy resources have also faced a hit back in the early months of 2013, reflecting reduced demand for energy resources, which accounts for majority of Russia’s growth. If we look at the supply side growth has been slow because of the difficulty in accessing the new explored fields, which are also costlier.
Consumer Price Index(CPI) made 0.3% in March 2013 which is less when compared with the corresponding figure of 0.6% in March 2012. According to the estimates made by Bank of Russia the net capital outflow reached $25.8 billion, which is $7.8 billion less than the appropriate indicator of 2012.
Standard & Poor gave a BBB credit rating for Russia, the second lowest grade of investment. Frailty of instituions and the country’s reliance on oil exports continues to offset its strong public finances. As a result of this S&P’s outlook for Russia is stable.
|Last Updated on : 21th February 2015||Next Update : February 2016|