Russian Economy

The Russian economy ranks 4th among the countries of the world and 1st among European countries in terms of GDP by PPP, which was estimated at $6.45 trillion in 2023 (according to the World Bank).

There are three sectors of the economy in Russia:

Primary. This is the extraction and processing of natural resources. In Russia, the basis of this sector is the extraction of minerals — gas, oil, coal and others. This also includes agricultural activities, fishing and animal husbandry, and the forestry industry.
Secondary. It is also called industrial. It includes the processing of raw materials and the production of goods. Work with minerals also extends to this sector — not mining, but processing. Construction, communications, transport, and processing of agricultural products also make a great contribution to this sector.
Tertiary. This is the service sector, which is now recognized as the main engine of economic progress and development in developed countries and Russia. Almost all sectors are included in this sector — primarily trade, finance, communications, transport, tourism, education, culture, health and social services, and entertainment.

All sectors are developing rapidly.

New deposits with minerals are being discovered. The industrial sector is actively developing, factories are being built. Large investments are being made in development of transport, tourism, education, healthcare and services. Space industry, high tech, IT, AI are very innovative and push other sectors to new levels.

THE ECONOMISTS OPPINION

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The Economists have assessed the real attractiveness of Russia for foreign investors.

Economists disagreed on how attractive Russia, which is under sanctions, to foreign investors now…
Today, opening a meeting of the government commission on foreign investment control, Russian Prime Minister Mikhail Mishustin said that despite the sanctions pressure, Russia remains attractive to foreign investors. The commission is currently considering several investment projects in strategic Russian enterprises operating in various industries. Among them are mining, transportation, transshipment of goods in ports, and industrial fishing.

According to the prime minister, Russia attracts investors with convenient business conditions, including in the field of taxation. In addition, the Russian energy system, which is one of the most reliable in the world, provides serious competitive advantages.

"Our economy, due to its structural features, has proven to be highly resistant to sanctions. Here it is worth paying attention to the fact that Mishustin called those industries that belong to the real sector of the economy attractive to investors, and they will always be quite stable under all circumstances. This is important for investors because it is a fairly reliable investment with an acceptable rate of return. For example, foreign trade has not gone away, but has moved from the west to the East. That is, in any case, the ports and the railway will work. Moreover, all this will take place in a world parallel to the sanctions," Mikhail Belyaev, PhD in Economics, told The Moscow Newspaper.

According to the expert, the arrival of foreign investors is also important for Russia from a political point of view. Because, working in the Russian Federation, these investors can influence the authorities of their own countries, limiting them in their desire to impose new sanctions.

Candidate of Economic Sciences Konstantin Selyanin, on the contrary, is sure that now not everything is as good as the prime minister says.

"What Mishustin said resembles a classic wishful thinking attempt, when some major facts are ignored and less significant or isolated ones are extolled. If we look at the situation realistically, the exodus of foreign investors from Russia continues. This happens literally every day. For example, yesterday there was news that Mercedes-Benz was leaving Russia, Kia was stopping sales of its cars, and KFC was selling its restaurants. It's all impossible to ignore. That is, if we are talking about attractiveness for investors, then we need to talk about everything that is happening," says Konstantin Selyanin.

The economist noted that the departure of large Western companies from Russia is often dictated to a greater extent not by politics, but by economic considerations. However, they are closely connected with politics.

"The fact is that their reputational costs affect company profits and capitalization. For example, for Kia, the Russian market has always been significant – 7% of revenue. However, Kia received 93% of its revenue in other countries of the world. The company is now ready to sacrifice revenue from Russia to avoid boycotts in other countries. Moreover, there have already been similar examples," the Villager explained.

At the same time, according to the expert, one should not deny isolated cases of large foreign investments. It is appropriate to recall the Sakhalin-1 oil and gas production project, from which the Japanese did not want to leave. At the same time, a large American investor Exxon Mobil Corporation withdrew from the project. However, the Indian state oil company ONGC immediately announced its readiness to buy out its share.