Russia is still an emerging market and the challenges are plenty. However, the
country’s economic growth has been remarkable, with an average seven percent GDP growth backed by the favorable energy situation on the world markets, tighter government budget policy, and faster development of other key industry sectors, such as machinery, automotive, info-communication, construction and food processing. The Russian government introduced positive changes into the tax system; including a flat rate of 13% for personal income tax, reducing the corporate tax rate from 35% to 24%, and reducing the value-added tax (VAT) to 18%. Surpassing even some developed economies, Russia reduced its public debt to 13% of its GDP . Finally, Russia’s evolving middle class creates a strong consumption wave that is a tremendous boost for the Russian economy.
Yet, Russian economic problems and challenges are well-known: corruption and
bureaucratic red-tape hampers foreign investment and small business development, while omnipresent piracy hits hard the image of Russia’s intellectual property environment. And on top of this, demographic decline will be a negative factor for the future generations of Russians.
Let’s have a glance at some major achievements invest in brics currency for the past decade. The financial instability and shock of foreign investors after the “Black Tuesday of 1998” changed to favourable admittance of positive changes – most of Russia’s international credit rating institutions gradually moved Russian ratings to the higher hierarchy, unthinkable just a few years ago.
The infamous Paris Club debt was fully paid well before its deadline, while the newly created Russian Stabilisation Fund brought the first interest rate profits. After years of having its currency under strict government control, the Russian government made the ruble fully convertible. Incredibly, the resurgence of the Russian economy from the shock and shambles of 1990’s disastrous privatisation, is reflected by its jump into the third position as the country with top Foreign Currency reserves (after China and Japan), with over USD 290 billion as of December 1, 2006. Importantly, in 2004 the Russian stock market grew by sixty percent and crossed the 1,000 point barrier and in fall of 2006 surpassed 1,600 points.
According to OPEC, Russia has also overtaken Saudi Arabia as the world’s largest oil producer. While superb oil and gas sector revenues are accountable for major and sustainable economic growth, other industry sectors are claiming their place under the sun. Among them, the information technology and communication sectors provided an incredible growth.