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Economy Russia
Economy - overview:
Russia ended 2005 with its seventh straight year of growth,
averaging 6.4% annually since the financial crisis of 1998. Although
high oil prices and a relatively cheap ruble are important drivers
of this economic rebound, since 2000 investment and consumer-driven
demand have played a noticeably increasing role. Real fixed capital
investments have averaged gains greater than 10% over the last five
years, and real personal incomes have realized average increases
over 12%. During this time, poverty has declined steadily and the
middle class has continued to expand. Russia has also improved its
international financial position since the 1998 financial crisis,
with its foreign debt declining from 90% of GDP to around 31%.
Strong oil export earnings have allowed Russia to increase its
foreign reserves from only $12 billion to some $180 billion at
yearend 2005. These achievements, along with a renewed government
effort to advance structural reforms, have raised business and
investor confidence in Russia's economic prospects. Nevertheless,
serious problems persist. Economic growth slowed to 5.9% for 2005
while inflation remains high. Oil, natural gas, metals, and timber
account for more than 80% of exports, leaving the country vulnerable
to swings in world prices. Russia's manufacturing base is
dilapidated and must be replaced or modernized if the country is to
achieve broad-based economic growth. Other problems include a weak
banking system, a poor business climate that discourages both
domestic and foreign investors, corruption, and widespread lack of
trust in institutions. In addition, a string of investigations
launched against a major Russian oil company, culminating with the
arrest of its CEO in the fall of 2003 and the acquisition of the
company by a state owned firm, have raised concerns by some
observers that President PUTIN is granting more influence to forces
within his government that desire to reassert state control over the
economy. State control has increased in the past year with a number
of large acquisitions. Most fundamentally, Russia has made little
progress in building the rule of law, the bedrock of a modern market
economy.
GDP (purchasing power parity):
$1.584 trillion (2005 est.)
GDP (official exchange rate):
$740.7 billion (2005 est.)
GDP - real growth rate:
6.4% (2005 est.)
GDP - per capita (PPP):
$11,000 (2005 est.)
GDP - composition by sector: agriculture: 5.4% industry: 37.1% services: 57.5% (2005 est.)
Labor force: 74.22 million (2005 est.)
Labor force - by occupation: agriculture: 10.3% industry: 21.4% services: 68.3% (2004 est.)