Market Overview >> Russia

Russia Country Market
Insights and Opportunities

Market Overview

With over 140 million consumers, a growing middle class, and almost unlimited infrastructure needs, Russia remains a promising market for U.S. exporters. In 2009, per capita personal disposable income ($4,830) and GDP ($15,200) were the highest among the BRIC countries. Prior to the global economic crisis, during which 2009 GDP declined 7.9%, Russia had a nine-year run of continuous rapid economic expansion, with GDP growing approximately 7% annually. Most domestic and international experts believe that Russia emerged from recession in the third quarter of 2009; forecasts for 2010 GDP range from 3.3% to 6.2%.

As a consequence of the global recession and falling commodity prices, Russia’s GDP declined a record 7.9% in 2009. Most domestic and international experts believe that Russia emerged from recession in the third quarter of 2009, and forecast 2010 GDP growth at 3-3.3%. Experts also expect that market conditions for U.S. and other exporters will improve as the recovery picks up speed.

Russia was the U.S.’s 32nd largest export market and the 20th largest exporter to the U.S. in 2009. U.S. exports to Russia were $5.4 billion, a 42% decrease from 2008. Russian exports to the U.S. were $18.2 billion, down 32% from 2008. Russian sources list the country’s leading trade partners as: China, the Netherlands, Germany, Italy, Ukraine, the U.S., Japan, Turkey, Poland, and France.

By the end of 2008, cumulative U.S. foreign direct investment in Russia was approximately $9.2 billion, a drop in value of 36% from 2007. According to Russian data, the U.S. is Russia’s sixth largest foreign investor.

The Bilateral Presidential Commission established in April 2009 is expected to result in increased opportunities for trade and investment between the two countries.

Market Challenges
Russia is a geographically vast market, stretching over 11 time zones and encompassing over 17 million square miles. Seriously undeveloped infrastructure causes logistical challenges, especially accessing markets outside of major cities. An incomplete transition from central planning has led to an insufficiently integrated economy and disparities in wealth distribution, geographically and demographically. Conducting business may be impeded by: burdensome regulatory regimes, inadequate IPR protection, inconsistent application of laws and regulations; lack of transparency; excessive government interference in business matters; and other market access barriers, such as protectionism. The global economic crisis has inhibited access to credit. The Russians immigration and visa system is complex, requiring time and expertise for business travelers to obtain necessary permissions to do business in Russia. English is not widely spoken.

Market Opportunities
Sectors that have opportunities for exporters include: Automotive Parts & Service Equipment/Accessories; Aviation; Chemical Production Machinery/Industrial Chemicals; Consumer Electronics; Cosmetics/Toiletries; Electric Power Generation & Transmission Equipment; Green Technology/Energy Efficiency; Medical Equipment; Restaurant Equipment; Security & Safety Equipment; and Travel & Tourism to the U.S.

  2012 3rd International Conference on Environmental Science and Development (ICESD 2012)