Economy of Russia
| Economy - overview: | Russia ended 2006 with its eighth straight year of growth, averaging 6.7% annually since the financial crisis of 1998. Although high oil prices and a relatively cheap ruble initially drove this growth, since 2003 consumer demand and, more recently, investment have played a significant role. Over the last five years, fixed capital investments have averaged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year. 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. The federal budget has run surpluses since 2001 and ended 2006 with a surplus of 9% of GDP. Over the past several years, Russia has used its stabilization fund based on oil taxes to prepay all Soviet-era sovereign debt to Paris Club creditors and the IMF. Foreign debt has decreased to 39% of GDP, mainly due to decreasing state debt, although commercial debt to foreigners has risen strongly. Oil export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to some $315 billion at yearend 2006, the third largest reserves in the world. During PUTIN's first administration, a number of important reforms were implemented in the areas of tax, banking, labor, and land codes. These achievements have raised business and investor confidence in Russia's economic prospects, with foreign direct investment rising from $14.6 billion in 2005 to an estimated $30 billion in 2006. In 2006, Russia's GDP grew 6.6%, while inflation was below 10% for the first time in the past 10 years. Growth was driven by non-tradable services and goods for the domestic market, as opposed to oil or mineral extraction and exports. Russia has signed a bilateral market access agreement with the US as a prelude to possible WTO entry, and its companies are involved in global merger and acquisition activity in the oil and gas, metals, and telecom sectors. Despite Russia's recent success, serious problems persist. Oil, natural gas, metals, and timber account for more than 80% of exports and 32% of government revenues, leaving the country vulnerable to swings in world commodity prices. Russia's manufacturing base is dilapidated and must be replaced or modernized if the country is to achieve broad-based economic growth. A 20% appreciation of the ruble over 2005-06 has made attracting additional investment more difficult. The banking system, while increasing consumer lending and growing at a high rate, is still small relative to the banking sectors of Russia's emerging market peers. Political uncertainties ahead of the elections, corruption, and widespread lack of trust in institutions continue to dampen domestic and foreign investor sentiment. From 2002 to 2005, the government bureaucracy increased by 17% - 10.9% in 2005 alone. President PUTIN has granted more influence to forces within his government that desire to reassert state control over the economy. Russia has made little progress in building the rule of law, the bedrock of a modern market economy. The government has promised additional legislation to make its intellectual property protection WTO-consistent, but enforcement remains problematic. |
| GDP (purchasing power parity): | $1.746 trillion (2006 est.) |
| GDP (official exchange rate): | $733.6 billion (2006 est.) |
| GDP - real growth rate: | 6.7% (2006 est.) |
| GDP - per capita (PPP): | $12,200 (2006 est.) |
| GDP - composition by sector: | agriculture: 5.3% industry: 36.6% services: 58.2% (2006 est.) |
| Labor force: | 73.88 million (2006 est.) |
| Labor force - by occupation: | agriculture: 10.8% industry: 29.1% services: 60.1% (2005 est.) |
| Unemployment rate: | 6.6% plus considerable underemployment (2006 est.) |
| Population below poverty line: | 17.8% (2004 est.) |
| Household income or consumption by percentage share: | lowest 10%: 1.7% highest 10%: 38.7% (1998) |
| Distribution of family income - Gini index: | 40.5 (2005) |
| Inflation rate (consumer prices): | 9.8% (2006 est.) |
| Investment (gross fixed): | 18.2% of GDP (2006 est.) |
| Budget: | revenues: $222.2 billion expenditures: $157.3 billion; including capital expenditures of $NA (2006 est.) |
| Public debt: | 8% of GDP (2006 est.) |
| Agriculture - products: | grain, sugar beets, sunflower seed, vegetables, fruits; beef, milk |
| Industries: | complete range of mining and extractive industries producing coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; defense industries including radar, missile production, and advanced electronic components, shipbuilding; road and rail transportation equipment; communications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables, textiles, foodstuffs, handicrafts |
| Industrial production growth rate: | 4.8% (2006 est.) |
| Electricity - production: | 952.4 billion kWh (2005) |
| Electricity - production by source: | fossil fuel: 66.3% hydro: 17.2% nuclear: 16.4% other: 0.1% (2003) |
| Electricity - consumption: | 940 billion kWh (2005) |
| Electricity - exports: | 22.3 billion kWh (2005) |
| Electricity - imports: | 9.9 billion kWh (2005) |
| Oil - production: | 9.4 million bbl/day (2005 est.) |
| Oil - consumption: | 2.5 million bbl/day (2005 est.) |
| Oil - exports: | 7 million bbl/day (2005) |
| Oil - imports: | 100,000 bbl/day (2005) |
| Oil - proved reserves: | 74.4 billion bbl (2005 est.) |
| Natural gas - production: | 641 billion cu m (2005 est.) |
| Natural gas - consumption: | 445.1 billion cu m (2005 est.) |
| Natural gas - exports: | 216.8 billion cu m (2004 est.) |
| Natural gas - imports: | 36.6 billion cu m (2004 est.) |
| Natural gas - proved reserves: | 47.57 trillion cu m (1 January 2005 est.) |
| Current account balance: | $105.3 billion (2006 est.) |
| Exports: | $317.6 billion (2006 est.) |
| Exports - commodities: | petroleum and petroleum products, natural gas, wood and wood products, metals, chemicals, and a wide variety of civilian and military manufactures |
| Exports - partners: | Netherlands 12.3%, Italy 8.6%, Germany 8.4%, China 5.4%, Ukraine 5.1%, Turkey 4.9%, Switzerland 4.1% (2006) |
| Imports: | $171.5 billion (2006 est.) |
| Imports - commodities: | machinery and equipment, consumer goods, medicines, meat, sugar, semifinished metal products |
| Imports - partners: | Germany 13.9%, China 9.7%, Ukraine 7%, Japan 5.9%, South Korea 5.1%, US 4.8%, France 4.4%, Italy 4.3% (2006) |
| Reserves of foreign exchange and gold: | $314.5 billion (2006 est.) |
| Debt - external: | $287.4 billion (30 June 2006 est.) |
| Economic aid - recipient: | in FY01 from US, $979 million (including $750 million in non-proliferation subsidies); in 2001 from EU, $200 million (2000 est.) |
| Currency (code): | Russian ruble (RUR) |
| Currency code: | RUR |
| Exchange rates: | Russian rubles per US dollar - 27.2 (2006), 28.284 (2005), 28.814 (2004), 30.692 (2003), 31.349 (2002) |
| Fiscal year: | calendar year |