Alan Greenspan: Economic Perspectives on Russia and Eastern Europe (1990)

• published: 23 Mar 2015
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Russia has a high-income mixed economy with state ownership in strategic areas of the economy. Market reforms in the 1990s privatized much of Russian industry and agriculture, with notable exceptions in the energy and defense-related sectors. Russia is unusual among the major economies in the way that it relies on energy revenues to drive growth. The country has an abundance of natural resources, including 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 the GDP, 52% of federal budget revenues and over 70% of total exports.[24][25] Russia has a large and sophisticated arms industry, capable of designing and manufacturing high-tech military equipment, including a fifth-generation fighter jet. The value of Russian arms exports totalled $15.7 billion in 2013—second only to the US. Top military exports from Russia include combat aircraft, air defence systems, ships and submarines. The Russian economy is the sixth largest in the world by PPP.[28] Between 2000 and 2012 Russia's energy exports fuelled a rapid growth in living standards, with real disposable income rising by 160%.[29] In dollar-denominated terms this amounted to a more than sevenfold increase in disposable incomes since 2000.[30] However, these gains have been distributed unevenly, as the 110 wealthiest individuals were found to own 35% of all financial assets held by Russian households.[31] Since 2008 Forbes has repeatedly named Moscow the "billionaire capital of the world".[32][33] Poor governance means that Russia also has the second-largest volume of illicit money outflows, having lost over $880 billion between 2002 and 2011 in this way.[34] The Russian economy went into recession from early 2014 - mainly as a result of the 2014 Russian military intervention in Ukraine and the subsequent capital flight.[35] However, based on final estimates, 2014 GDP growth remained positive at 0.6%. Russian banks were hit by the global credit crunch in 2008, though no long term damage was done thanks to proactive and timely response by the government and central bank, which shielded the banking system from effects of the global financial crisis.[52][53][54] A sharp, but brief recession in Russia was followed by a strong recovery beginning in late 2009.[39] After 16 years of negotiations, Russia's membership to the WTO was accepted in 2011.[55] In 2013, Russia was labeled a high-income economy by the World Bank.[56] Russian leaders repeatedly spoke of the need to diversify the economy away from its dependence on oil and gas and foster a high-technology sector.[57] In 2012 oil, gas and petroleum products accounted for over 70% of total exports.[25] This economic model appeared to show its limits, when after years of strong performance, Russian economy expanded by a mere 1.3% in 2013.[39] Several reasons have been proposed to explain the slowdown, including prolonged recession in the EU, which is Russia's largest trading partner, stagnant oil prices, lack of spare industrial capacity and demographic problems.[58] Political turmoil in neighboring Ukraine added to the uncertainty and suppressed investment. According to survey provided by Financial Times in 2012, Russia was second by economic performance among G20, following Saudi Arabia. Economic performance estimate on seven measures: gross domestic product growth, budget deficit and government debt for 2012; economic recovery – output compared with the pre-crisis peak; change in debt since 2009; change in unemployment from 2009 to 2013; and, finally, the deviation of the current account from balance.[59] Forbes magazine lists Russia as #91 in the best countries for business. The country has made substantial improvement recently in areas like innovation and trade freedom. (Forbes ranks each country in a number of categories and draws from multiple sources such as the World Economic Forum, World Bank, and Central Intelligence Agency).[60] Since 2008, Moscow has been by Forbes magazine repeatedly named the "billionaire capital of the world". According to the Russian economic ministry in July 2014, GDP growth in the first half of 2014 was 1%. The ministry projected growth of 0.5% for the entire 2014.[61] In December 2014 Russia's inflation rate was 11.4 percent and grew to 13.2 percent as of Jan. 26, 2015. With low oil prices, capital flight since the Western sanctions over the Ukraine crisis, there is concern of a recession. http://en.wikipedia.org/wiki/Economy_of_Russia