Doing business in Russia
Russia is the world’s largest country and has an immense diversity and quantity of natural resources and 11 time zones, from the Kaliningrad Oblast in the Baltics to Kamchatka Krai in the Far East. Six environmental belts span over the entire Russian landmass and include arctic desert, tundra, taiga, mixed and deciduous forest, wooded steppe, and steppe. Forests of various kinds account for more than two-fifths of the country. The total population is more than 142 million, approximately one-fourth of who live in one of 15 major cities, including the capital Moscow with a population of almost 13 mn, followed by St. Petersburg, Novosibirsk and Ekaterinburg.
Russia’s major industries are machinery construction, chemicals, energy (oil and gas), and agriculture. The Russian economy’s main imports have, in recent times, been consumer goods, pharmaceutical products, cars, semi-finished products, meat, fruits and nuts, and optical and medical instruments. Russia’s economic strength comes from the export of goods, mostly from the primary sector (natural gas, oil, metals, wood, and chemicals).
A broad range of government incentive programs have been developed with the aim of attracting investors to Russia, including many options to reduce tax burdens and special zones with a range of benefits and ready-to-use infrastructure. While the northwestern part of Russia is the hub for the logistics and pharmaceutical industries, the central region around Moscow is famous for its automotive and mechanical engineering clusters.
Russia ranked 31st out of 190 countries in the 2019 World Bank Ease of Doing Business rankings, reflecting the legislative changes to improve the business environment. GDP is predicted to grow 1.2% in 2019, a prediction that has been revised down from 1.5%. However, predictions for 2020 and 2021 are 1.8%. The overall economic situation in Russia remains highly dependent on international sanctions (reducing annual GDP growth by an estimate 1.1%) and the price of oil. Long term growth in Russia is dependent on political and structural reforms, along with diversification of the economy away from the oil and gas sector. Current economic initiatives focus on IT development, digital technologies and robotics, as well as further expanding industrial parks, special economic zones, and investment incentives programs.