Yekaterinburg

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Economy Russia

Economy - overview:
Russia ended 2004 with its sixth straight year of growth, averaging
6.5% annually since the financial crisis of 1998. Although high oil
prices and a relatively cheap ruble are important drivers of this
economic rebound, since 2000 investment and consumer-driven demand
have played a noticeably increasing role. Real fixed capital
investments have averaged gains greater than 10% over the last five
years, and real personal incomes have realized average increases
over 12%. Russia has also improved its international financial
position since the 1998 financial crisis, with its foreign debt
declining from 90% of GDP to around 28%. Strong oil export earnings
have allowed Russia to increase its foreign reserves from only $12
billion to some $120 billion at yearend 2004. These achievements,
along with a renewed government effort to advance structural
reforms, have raised business and investor confidence in Russia's
economic prospects. Nevertheless, serious problems persist. Economic
growth slowed down in the second half of 2004 and the Russian
government forecasts growth of only 4.5% to 6.2% for 2005. Oil,
natural gas, metals, and timber account for more than 80% of
exports, leaving the country vulnerable to swings in world prices.
Russia's manufacturing base is dilapidated and must be replaced or
modernized if the country is to achieve broad-based economic growth.
Other problems include a weak banking system, a poor business
climate that discourages both domestic and foreign investors,
corruption, and widespread lack of trust in institutions. In
addition, a string of investigations launched against a major
Russian oil company, culminating with the arrest of its CEO in the
fall of 2003, have raised concerns by some observers that President
PUTIN is granting more influence to forces within his government
that desire to reassert state control over the economy.

GDP (purchasing power parity):
$1.408 trillion (2004 est.)

GDP - real growth rate:
6.7% (2004 est.)

GDP - per capita:
purchasing power parity - $9,800 (2004 est.)

GDP - composition by sector:
agriculture: 4.9%
industry: 33.9%
services: 61.2% (2004 est.)

Labor force:
71.83 million (2004 est.)

Labor force - by occupation:
agriculture 12.3%, industry