A key goal of the government in the coming years will be to scale down its dominant role in the economy. Reducing excessive state interference in the economy is now an important factor. The state reacts to crises far slower than an economic entity acting on market signals.
Despite a global financial crisis, Russia is on the expansion mode against a surge in global oil and gas prices and increasing consumer spending. In the last 10 years, economic growth averaged a healthy 7% per annum. In 2007, it exceeded 8% against 7.4% in the previous year. Yet, Russia has underperformed in terms of growth compared to the other former Soviet Republics which have grown by an average of nearly 9% over the last three years. There is much apprehension about the spiraling real estate prices, massive bureaucracy, corruption, expensive credit and bad governance, which are spurring prices and hindering economic development. However,
Russia has come a long way from economic instability to become
prosperous in less than 20 years. It has become the second
largest receiver of foreign direct investment among emerging
markets after Hong Kong, and is leading among the BRIC nations.
Though a majority of Russia's outward direct investment flows
are concentrated in the oil, gas and metals sectors, companies
from telecom, financial and retail sectors are also expanding
abroad.
The
country could overtake Germany to become Europe's biggest
car market this year, with sales reaching around 3.3 million.
Not just cars, Russians are investing big in refurbishing
ageing steel companies. The country has taken up leading positions
in knowledge-based industries, such as space, atomic energy,
power equipment and others. These industries have become the
main drivers of the country's economic growth. |
