Macro Situation in Russia

The Gross Domestic Product (GDP) in Russia was worth 2014.80 billion US dollars in 2012. The GDP value of Russia represents 3.25 percent of the world economy. The Gross Domestic Product (GDP) in Russia expanded 0.90 percent in the first quarter of 2014, down from a 3.4% increase in 2012. Russia’s first-quarter economic growth slowed to the weakest in a year as the standoff against the U.S. and its allies over Ukraine shrivel up investment. The role of this factor is big as Russia had a 4.2 percent drop in fixed-capital investment in the first quarter. The lack of more comprehensive structural reforms has led to the erosion in businesses’ and consumers’ confidence. In the past, the lack of comprehensive structural reforms was masked by a growth model based on large investment projects, continued increases in public wages, and transfers – all fueled by sizeable oil revenues. Recent events around the Crimea crisis have compounded the lingering confidence problem into a confidence crisis and more clearly exposed the economic weakness of this growth model. Political uncertainties around the Crimea crisis in early March 2014 led to an increase in market instability. Consumption growth is forecast to decrease to about 2 percent for 2014-2015 in the low-risk scenario, compared to 3.4 percent in 2013. Russia’s long-term outlook will depend on a sustained positive shift in investors’ and consumers’ confidence. The inflation rate in Russia was recorded at 7.30 percent in April of 2014. Unemployment Rate in Russia decreased to 5.30 percent in April of 2014 from 5.40 percent in March of 2014. Unemployment Rate in Russia averaged 8.06.