Economics of Russia

Economics of Russia

Russia exhibits a stable economic status whose global rank remains among the top twenty economies in the world. The country has a significantly high nominal GDP that provides it with an immense economic power compared to other developed nations. Despite being the largest country in the world by landmass, Russia has an extensive oil reservoir, metals, and other minerals that serve as the major exports for the country. Over the years, the economic trends of Russia indicate that the country’s economy has been improving steadily. For a precise analysis, this paper focuses on the Russian economic trends in areas such as industrial growth, inflation, taxation, economic growth rates, and monetary policies, among other factors.

Economic Growth Rates of Russia

The Russian economy exhibits a consistent growth in the past three years. However, the country had its highest GDP in 2013, where it recorded 2.297 trillion. The output reduced drastically in the subsequent years, 2014, 2015, and 2016, which registered 2.06, 1.364, and 1.283 trillion, respectively. Since 2017, the Russian GDP has been increasing over the years, where it had 1.579 trillion in 2017 and 1.658 trillion in 2018. The subsequent years also indicate a positive trend in the total market value of output.

The 1991 breakup of Russia and the Soviet Union, inclined Russia to maintain a mixed economy whose industrial growth has been kept positive for many years. The primary industries in Russia include oil and gas, metal and stone processing, mining, weapon and military machinery manufacturing, and aircraft building, among others. These industries help to sustain the Russian economy since they provide employment opportunities to people and boost the per capita income of the country. The availability of the firms has reduced the unemployment rate and increased the standards of living of Russian citizenry. Although Russia exhibits a thriving economic status, some seasonal factors tend to influence its progress. For instance, the fluctuations in oil prices affect the commercial success of the country, as it leads to recession. However, since 2016, the country has maintained a booming economy as its taxation rates remain above 10%. The income tax rates for Russian citizens is expected to increase in the coming years to improve the nation’s revenue.

Interest Rates, International Trade, Labor Costs, and Consumer Disposable Income

Russia participates in international trade intensively, as it exports petroleum products, oil, coal, and gas. The country boasts of the expansive landmass that contains oil fields and minerals such as ferrous and non-ferrous metals, which are exported to the international market. The trends in interest rates of the country keep on changing to control the businesses within its borders. For instance, the 2020 interest rate stands at around 5.00% based on the World Bank data. The comparison between the interest rates of Russia in 2019 and 2020 indicates that the country has lowered the prices by a significant margin to encourage, however, reduced the percentage interest rate by over 0.25% to encourage local investment. The reduction of the interest rates has helped Russia in boosting its GDP since many investors are encouraged to invest.

The labor market of Russia has adopted a non-standardized mode of adjustments. The country has achieved an average monthly income of $200-250. On the other side, the cost necessities cost less than $70 per month.  From this analysis, it is evident that the Russian citizenry has a significant amount of disposable income. This aspect helps in providing the market for locally sold commodities. Further, the credit information in Russia is maintained by the Central Bank of Russia, which issues monetary policies. On the same note, the credit availability in the country has been heightened to encourage locals to access credit facilities that can help them to start and run their business.