RUSSIA AND ITS

ECONOMY
Madhu S
Mageshwaran G
Krithika A Jain
Nanditha Varma
Samrudhi Kishore
• The economy of Russia is an upper-middle income mixed and
Transition Economy.

• It is the fifth-largest national economy in Europe, the eleventh-

largest nominal GDP in the world, and the fifth-largest by
purchasing power parity.

•Russia's vast geography is an important determinant of its

economic activity, with some sources estimating that Russia
contains over 30 percent of the world's Natural ressources.

•The World Bank estimates the total value of Russia's natural

resources at $75 trillion US dollars. Russia relies on energy
revenues to drive most of its growth.

•Russia has an abundance of oil, natural gas and precious

metals, which make up a major share of Russia's exports.

•As of 2012, the oil-and-gas sector accounted for 16% of GDP,

52% of federal budget revenues and over 70% of total exports.
•Russia is considered an "energy superpower".

•It has the world’s largest proven natural gas reserves and is the
largest exporter of natural gas.

•It is also the second-largest exporter of petroleum.

•
•In Russia 13.4 % of total population is living below poverty line.

•The unemployment rate in Russia is 5.4%.

• Defense is second supporting pillar for Russian economy

manufacturers fifth-generation fighter jets nuclear powered
submarines advanced firearms etc.
 MAJOR CHANGES IN THE ECONOMY
 In the Soviet economy from the early 1930s the highest priority sector was the military economy and
within that the defence industry, like the rest of Soviet industry entirely state owned.

 From 1930- 1932, the Economic policy was confused. The first five years plans has not been
planned properly. Attempts to target led to decline in rate of industrial growth. Free peasant market
legalized.

 In 1933, Disastrous 1932 harvest(Stalin supposedly let it get worse) grain quotas increased. Targets
for second five year plan more realistic.

 From 1934-1936, spectacular economic development where factories were built first and agriculture
slowly recovered. Increased repression.

 From 1937-1941, mass repression and prep for war. Purges caused a slowing down in agriculture,
despite a tightening of labour discipline.

 
 Boris Yeltsin, in 1991, began implementing a number of radical economic reforms including price
liberalization, mass privatization, and stabilization of the ruble. The privatization reforms would see 70%
of the economy privatized by the middle of 1994 and in the run-up to the 1996 presidential election.

 Despite Yeltsin’s reforms, the economy performed horribly through much of the 1990s. From about 1991
to 1998 Russia lost nearly 40% of its real gross domestic product (GDP), and suffered numerous bouts of
inflation that decimated the savings of Russian citizens.

 But just as things were beginning to look optimistic, the financial crisis that began in Asia in the summer
of 1997 soon spread to Russia causing the ruble to come under speculative attack. The currency
crisis would soon be exacerbated by the drop in oil prices at the end of the year, and in the middle of
1998, Russia devalued the ruble, default on its debt, and declare a  to foreign creditors. Real GDP growth
became negative again in 1998, declining by 4.9%.

 A significantly depreciated ruble helped stimulate domestic production leading to a spurt of economic
growth over the next few years with real GDP growth, reaching 8.3% in 2000 and approximately 5% in
2001.
 
 Between 2000 and the end of 2002, Putin enacted a number of economic reforms including simplifying
the tax system and reducing the number of tax rates.
https://www.investopedia.com/articles/investing/012116/russian-economy-collapse-soviet-union.asp
 Putin was responsible for the first systematic attempt to reform Russia’s economy. In 2000 he
launched the so-called Gref plan (“Programme for the Socio-Economic Development of the
Russian Federation for the Period 2000-2010”)
 In the midst of these negative indicators, Russia would manage to eke out growth in 1997, the first
positive growth experienced since the collapse of the Soviet union.
 The 2008 global financial crisis and the drop in the price of oil have revealed the nature of Russia’s
resource dependent economy highlighted the need for continued structural reforms. Russia’s
economy was hard hit by the global financial crisis with output declining by 7.8% in 2009.
 In January 2011, Putin instructed the Higher School of Economics and the Presidential Academy of
National Economy and Public Administration to create a new Strategy 2020, which resulted in the
so-called first round of the May Decrees in 2012, signed on May 7 that year.
 The result of the first round of May Decrees did little to reverse the slide into
stagnation, so they were replaced with a new round of May Decrees in 2018
that have been augmented with the 12 national projects that are the latest
version of the plan to transform Russia’s economy.
 

Source: https://www.themoscowtimes.com/2019/08/19/long-read-russias-economy-under-putin-in-numbers-a66924
 COVID- 19 IMPACT
• Prices for crude oil, Russia’s largest export, have plummeted since the start of the year, while oil demand is expected
to decline by an unprecedented 8 percent in 2020. Russia is heading toward a recession, with negative growth in
most sectors in 2020.

• As the economic impact of COVID-19 pandemic reveals itself, Russia has set a deadline of 1 June for the
formation of a national economic recovery plan.

• The International Monetary Fund (IMF) estimates that the pandemic will result in the Russian economy contracting
by 5.5 percent before achieving economic growth of 3.5 percent in 2021.

• Till now, the economic stimulus announced by the Russian government stands at roughly 2.8 percent of the GDP,
leading to criticisms of an inadequate response, with some economists calling for spending between seven to ten
percent of the GDP to cope with the crisis.

https://www.investopedia.com/articles/investing/012116/russian-economy-collapse-soviet-union.asp
https://www.youtube.com/watch?v=XVE80yXByM8&feature=youtu.be