All values, unless otherwise stated, are in US dollars. Russia has an upper-middle income mixed economy with state ownership in strategic areas eepc india forex the economy.
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. The economic development of the country has been uneven geographically with the Moscow region contributing a very large share of the country’s GDP. By the 1970s the Soviet Union entered the Era of Stagnation. The complex demands of the modern economy and inflexible administration overwhelmed and constrained the central planners. The volume of decisions facing planners in Moscow became overwhelming. Following the collapse of the Soviet Union, Russia had undergone a radical transformation, moving from a centrally planned economy to a globally integrated market economy.
Yeltsin’s program of radical, market-oriented reform came to be known as a “shock therapy”. It was based on the recommendations of the IMF and a group of top American economists, including Larry Summers. The majority of state enterprises were privatized amid great controversy and subsequently came to be owned by insiders for far less than they were worth. For example, the director of a factory during the Soviet regime would often become the owner of the same enterprise. Difficulties in collecting government revenues amid the collapsing economy and a dependence on short-term borrowing to finance budget deficits led to the 1998 Russian financial crisis. The IMF was the subject of criticism for lending so much as Russia introduced little of the reforms promised for the money and a large part of these funds could have been “diverted from their intended purpose and included in the flows of capital that left the country illegally”. Russia bounced back from the August 1998 financial crash with surprising speed.
Much of the reason for the recovery was devaluation of the ruble, which made domestic producers more competitive nationally and internationally. Between 2000 and 2008, Russian economy got a major boost from rising commodity prices. Disposable incomes more than doubled and in dollar-denominated terms increased eightfold. Inflation remained a problem however, as the central bank aggressively expanded money supply to combat appreciation of the ruble. Russian banks were hit by the global credit crunch in 2008, though no long term damage was done thanks to proactive and timely response by the government and central bank, which shielded the banking system from effects of the global financial crisis. After 16 years of negotiations, Russia’s membership to the WTO was accepted in 2011. In 2013, Russia was labeled a high-income economy by the World Bank.
Russian leaders repeatedly spoke of the need to diversify the economy away from its dependence on oil and gas and foster a high-technology sector. According to survey provided by Financial Times in 2012, Russia was second by economic performance among G20, following Saudi Arabia. The ministry projected growth of 0. The Russian economy grew by a better than expected 0. According to Herman Gref from Sberbank, the contraction of Russian economy is “not a crisis but rather a new reality” to which it has to adapt, primarily due to the low oil prices. He also presented a number of metrics demonstrating the change – the GDP has fallen by 3.
During 2014-2015 a quarter of banks in Russia left the market, the expenses of Russian bank guarantee fund reached 1 trillion roubles plus additional government funds for recapitalisation of banks reached 1. At the end of 2016, the United States imposed further sanctions on the Russian Federation in response to what the US government said was Russian interference in the 2016 United States elections. In 2016, the Russian economy was the sixth largest in the world by PPP and twelfth largest at market exchange rates. The Russian economy risked going into recession from early 2014, mainly due to falling oil prices, sanctions, and the subsequent capital flight. In January 2016, the US company Bloomberg rated Russia’s economy as the 12th most innovative in the world, up from 14th in January 2015 and 18th in January 2014. A poll completed in 2018 among 1400 managers of non-hydrocarbons Russian businesses demonstrated high level of pessimism, with majority describing the economic situation in the country as “catastrophic”.
In 2017, Russia’s GDP growth was at about 1. 5 percent compared to the previous year. It was the first year of growth since 2014. The Russian ruble is the unit of currency of the Russian Federation. The Russian monetary system is managed by the Bank of Russia. Founded on 13 July 1990 as the State Bank of the RSFSR, Bank of Russia assumed responsibilities of the central bank following the breakup of the Soviet Union in 1991. According to the Constitution, Bank of Russia is an independent entity, with the primary responsibility of protecting the stability of the national currency, the ruble.