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Russian Federation: Country Profile 2010
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Prepared by Economic Section SA Embassy in Moscow December 2010 |
The size: 17.075.400 km2
Geographical Location
Northern Asia (the area West of the Urals is considered part of Europe), bordering the Arctic Ocean, between Europe and the North Pacific Ocean.
Borders/neighbours (land boundaries – km)
Azerbaijan (284 km), Belarus (959 km), China (southeast – 3,605 km), China (south) 40km, Estonia (294 km), Finland (1,340 km), Georgia (723 km), Kazakhstan (6,486km), North Korea (19 km), Latvia (217 km), Lithuania (Kaliningrad region – 280.5 km), Mongolia (3,485km), Norway (196 km), Poland (Kaliningrad region – 232 km), Ukraine (1,576 km).
Climate
Ranges from steppes in the south through humid continental in much of European Russia; sub arctic in Siberia to tundra climate in the polar north; winters vary from cool along Black Sea coast to frigid in Siberia; summers vary from warm on the steppes to cool along the Arctic Coast.
Size
141,9 million people (end of 2009 est.)
Age Structure
0-14 yrs: 14.6% (male 10,577,858/female 10,033,254)
15-64yrs: 71.2% (male 48,187,807/female 52,045,102)
65 yrs and over: 14.4% (male 6, 162,400/female 13,695,673) (May 2008 est )
Ethnic groups
More than 60 nationalities are represented in the Russian Federation: Russians 79.8%, Tartar 3.8%, Ukrainian 2%, Bashkir 1.2%, Chuvash 1.1%, unspecified 12.1% (2002 census).
Religion
Most Russians, Belarussians, and Ukrainians are Orthodox Christians. Most of the non-Slavic peoples are Muslims; Buryats, Kalmucks, and Tyvians are Buddhists.
Large populations of practicing believers and non-believers.
Russian Orthodox: 15-20%, Muslim 10-15%, other Christian 2%.
Labour Force
75.1 million (November 2008 est)
Population below poverty line
15.8% (November 2008 est)
The Russian Federation had Presidential elections in March 2008 and a new President Mr Dmitry Medvedev was elected. Nevertheless, the previous president Mr. Vladimir Putin became the Prime Minister.
The Russian Federation is a federal Republic with a written constitution and a strong Presidency. Presidential elections take place every four years, and the President is limited to two successive terms of office.
The Parliament of the Russian Federation, the Bicameral Federal Assembly or Federalnoye Sobraniye, consists of the State Duma or Gosudarstvennaya Duma, the Lower House, and the Federation Council or Sovet Federacii, the Upper House.
The Duma has 450 members elected by direct popular vote for four-year terms. The Federation Council consists of 168 seats.
Main political parties: United Russia (Edinaya Rossiya), the Communist Party of the Russian Federation (CPRF), the Liberal-Democratic Party and the JR.
The GDP growth in 2010 is estimated at 4.0% compared to 2009 (fall at 7.8% in 2009 against 2008). It amounted to RUR44491.4 bn (USD1465.5 bn) in 2010. The deflator index in 2010 is 110.3. The GDP grew by 4.1% in Q1 2011.
Russia's exports of goods increased from USD303.4 bn in 2009 to USD400.1 bn in 2010 according to the Russian Central Bank data. Total merchandise exports of Russia rose by 31.9% in 2010 compared to 2009 (in 2009 their fall was 35.7% against 2008).
Index of output of five basic economic sectors (industry, construction, agriculture, transport, retail trade) was 104.7 in 2010 as compared with 2009 (90.2 in 2009 compared to 2008). Index of industrial output was 108.2 in the same period (90.7 in 2009 against 2008).
The main stable internal source of expanding final consumption and, consequently, production is growing real incomes of population. Real disposable incomes of population went up by 4.1% in 2010 compared to 2.1% a year before. Real wages increased by 4.6% in 2010 as against their fall at 3.5% a year before; this means real disposable incomes grew in 2010 less than wages and salaries. Increase of real disposable incomes brings rising imports of competing consumer goods against a background of real effective ruble appreciation lately. Real effective appreciation of ruble against the basket of foreign currencies of the Russian trade partners is 9.6% in 2010 against 2009 (depreciation at 5.6% compared to 2008). Real ruble appreciation against USD is 9.7% in 2010 as compared with 2009, while real ruble appreciation against Euro is 15.5% in the same period. Index of consumer prices was 106.9 in 2010 as compared with 2009 (111.7 in 2009 compared to 2008); it reached in December 2010 against December 2009.
In accordance with the official revised estimation, imports share in saleable resources of retail turnover was 41% in 2009 and amounted to 44% in 2010.
According to the Russian Central Bank, total merchandise imports of Russia amounted to USD248.7 bn in 2010 and increased by 29.7% compared to their fall at 34.3% in 2009 (USD 191.8 bn). Another source of final consumption — capital inflow is not stable enough. According to the Russian Central Bank revised estimates, there was net private capital outflow at USD56.1 bn in 2009. Net private capital outflow amounted to USD35.3 bn in 2010. Higher world prices of Russian major export commodities led to slow growth of incomes of legal entities and slight overall investment rise - 6.0% rise in 2010 compared to 16.2% fall in 2009.
Industrial output rose by 8.2% in 2010 as against its fall at 9.3% in 2009, cargo turnover of transport companies rose by 6.9% as compared with its fall at 10.1%, accordingly.
Among other branches of Russia's economy the communication sector expanded by 2.3% in 2010 compared to 2009 (2.9% in 2009 against 2008).
Retail turnover rose in 2010 by 4.4% as against its fall at 4.9% in 2009, while real dis¬posable incomes went up by 4.1% and real wages went up by 4.6%, accordingly. The volume of services rendered to natural entities went up by 1.5% in 2010 compared to its fall by 4.2% in 2009. Consumer prices index in December 2010 reached 108.8 compared to December 2009. Prices of non-food goods (105.0) increased less than those of foodstuffs (112.9) and services (108.1) in 2010. Prices of natural gas (17.4%) and electricity (12.0%) as well as transport (8.7%), housing and communal services (13.0%) for natural entities cause further increase of prices of nearly all other goods. Index of industrial producer prices was 116.7 in December 2010 compared to December 2009.
The formal indicator of money supply (M2) growth increased in 2010 by 28.5% (up to RUR20173.4 billion as on January 1, 2011) against January 1, 2010.
The main developments in the financial sphere of Russia were caused in 2010 by growing surplus of supply over demand of foreign exchange at the foreign currency market in result of rising exports of Russian raw materials. The world economic recovery brought rise in prices of Russia's major export commodities and consequent growth of Russian ruble exchange rate. Demand for foreign exchange was also increasing due to repayment of still large amounts of external debts (the total amount of external debt liabilities, including those of the private sec¬tor) was estimated by the Russian Central Bank at USD154.5 bn in 2010.
Russia's gold and foreign exchange reserves amounted to USD479.4 bn by January 1, 2011. That was by 9.1% more than in January 1, 2010 - USD439.5 bn. They went up to USD502.5 bn by April 1,2011.
Total deficit of the federal budget is estimated at 5.9% of the GDP in 2009 as against the total proficit at 4.1% in 2008. The total deficit of the federal budget is estimated at RUR1811.8 bn in 2010 or 4.1% of the GDP and is forecasted for 2011 at 1.3% of the GDP.
Overall federal budget revenue in 2010 amounted to RUR8303.8 bn (USD273.5 bn). Ex¬ecution of the federal budget can be appraised as satisfactory, as the 2010 revised plan for collecting revenues was fulfilled at 105.4% in 2010.
Real disposable money incomes of population increased by 4.1% in 2010 compared to when there was rise at 2.1% (real disposable money income takes into account consumer price index growth, taxes and other obligatory payments).
Average monthly salary reached RUR21090 in 2010 (USD695) or increased by 3% in nominal terms and by 4.2% in real calculation compared to 2009. Total wage arrears stood at RUR2.4 bn (USD0.078 bn) as of January 1, 2011 and went down by 32.7% from RUR3.565 bn (USD0.118 bn) a year before. State wage arrears (employees financed by budgets of all levels) made up RUR21 mln by January 2011 or 0.9% of total wage arrears and decreased by 89.3% compared to January 1, 2010.
In the structure of money income formation in 2010 the shares of incomes due to social transfers went up compared to 2009. At the same time the share of incomes due to wages and salaries, as well as business and property went down.
The share of wages and salaries decreased to 66.4% in 2010 against 66.9% in 2009. Social transfers went up among the sources of money incomes of Russia's population: 18.0% in 2010 as against 14.9% in 2009. The share of incomes due to business in 2010 decreased to 9.3% from 9.7% in 2009. At the same time the share of incomes due to property decreased from 6.5% to 4.3%. The share of other incomes was 2.0% in 2010 as in 2009.
In 2010 the share of purchase of goods and services was 69.9% (purchase of goods - 54.5%, services - 15.4%) in money income disposal and increased by 0.4 per cent point compared to 2009. Meanwhile the share of personal savings went up from 14.0% in 2009 to 14.5% in 2010. The share of cash currency purchase (3.7%) went down compared to 2009 (5.5%). At the same time the tax burden on natural entities (share of personal tax and other obligatory payments) went down in 2010 to 10.1% as compared with 10.6% in 2009.
The size of money savings of natural entities (without savings on foreign exchange accounts and cash foreign exchange) rose from RUR9093.9 bn (USD300.7 bn) at the start of 2010 and reached RUR12171.3 bn (USD399.3 bn) by January 1, 2011.
By January 1, 2011 the money savings included RUR7874.9 bn as bank deposits (64.7% of the total), RUR3344.2 bn in cash (27.5%) and RUR952.2 bn in various securities (7.8%).
Social economic differentiation of Russia's population aggravated in 2010 compared to 2009, as the top 10% concentrated 31.1 % of total money incomes (31.0% in 2009) and the least 10% received only 1.9% (1.9%); this making the difference between the average incomes of the former and the latter groups (the so called coefficient of funds) at 16.8 times in 2010 compared to 16.7 in 2009. The aggregate share of social layers above the survival level (the share of people having per capita monthly incomes more than RUR7000) in distribution of the overall income increased from 76.7% in 2009 up to 81.5% in 2010.
The overall number of registered legal entities as of January 1, 2011 totalled 4823.3 thousand, of which 1788.5 thousand (37.1%) were in trade and repair services and 450.1 thousand (9.3%) were busy with industrial activity. Public and municipal companies (365.9 thousand) accounted for 7.6% of the total. The overall number of registered legal entities went down by 1.7%, the number of the entities concentrated in trade and repair services decreased by 3.1% and the number of the entities dealing with industrial output also fell by 3.1% as against January 1, 2010.
Net income (gross profits minus losses) of Russian enterprises and organizations (legal entities, excluding small business, banks, insurance and budget organizations) in 2010 reached RUR6132.9 bn (USD202.0 bn) or was 119.5% of the 2009 result. The share of legal entities reporting losses was at the level of 27.8% in 2010; i.e. it was by 2.3 per cent point less than in 2009. Gross profits of 46.0 thousand companies totalled RUR6929.8 bn (USD228.3 bn), while 17.8 thousand companies reported losses at RUR796.9 bn (USD26.2 bn). The main leaders are companies of major export-oriented industries (fuel, ferrous and non-ferrous metal industries) - 44.4% of total net income; the outsiders concentrate in housing and communal services.
Investment activity grew in 2010 by indicating 6.0% increment (16.2% fall in 2009). The total size of gross fixed investment (less VAT), including small business and households, amounted to RUR9154.4 bn in 2010 (USD 184.0 bn).
The share of foreign investment in the Russian gross fixed investment (less VAT), excluding small business and households, is 6.2% in 2010 compared to 8.9% in 2009.
Index of Russia’s industrial output in is equal to 108.2 as compared with 90.7 in 2009. Industrial production reached RUR27084 bn (USD892.1 bn) in current prices in 2010.
Output of minerals amounted to RUR6114 bn (USD201.4 bn) and rose by 3.6% in real terms in 2010 compared to its fall at 0.6% in 2009, while production of fuels rose by 3.1% (up by 0.4% in 2009) and extraction of other minerals increased by 7.3% (down by 7.4% in 2009).
Production in manufacturing industries reached RUR17553 bn (USD578.2 bn) in 2010. Industrial growth in the manufacturing industries was 11.8% in 2010 as against its fall at 15.2% in 2009. Industrial growth was more than in average in such industries as production of leather and footwear - 18.7%, textile and apparel - by 12.1%, output of chemicals - by 14.6%, plastic and rubber wares - by 21.5%, metals and metal wares - by 12.4%, machines and equipment - by 12.2%, electric, electronic and optical equipment by 22.8%, vehicles - by 32.2%.
Output of food industry went up by 5.4%, coke and oil - 5.0%, wood pulp and paper by 6.6%, timber and wooden wares – by 4%, construction materials - by 10.7% in 2009.
Construction activity is valued in 2010 at RUR4206.1 bn (USD 138.5 bn) demonstrating fall at 0.6% in constant prices compared to 2009 when there was fall at 13.2%.
Russian agricultural output in 2010 reached RUR2444.8 bn (USD80.5 bn) or went down by 11.9% compared to its rise at 1.4% in 2009. Grain harvest in Russia went down from 97.1 mln t in 2009 to 60.9 mln t in 2010, production of sunflower seeds decreased by 17.3% to 5.3 mln t, that of sugar beets - by 10.7% to 22.2 mln t, that of potatoes - by 32.1% to 21.1 mln t.
Russia’s live-stock farming does not meet domestic requirements in animal produce, as before. But in 2010 the RF total imports of all kinds of meat, including poultry meat, went down to 2129.6 thousand t from 2423.7 thousand t in 2009. Russia’s imports of meat amounted to about 25% of Russia’s total meat consumption in 2010.
According to the customs statistic data, Russia’s foreign trade turnover amounted to USD625.4 bn in 2010 and increased in value terms by 33.3% against 2009 (in 2009 - fell by 36.2% compared to 2008), inclusive of the far abroad countries - USD534.1 bn (up by 33.4%), the CIS member states - USD91.3 bn (up by 33.0%). The rise of foreign trade in value terms in 2010 was called forth by considerable rise in exports due to growing prices and natural volumes as well as by substantial growth of imports in real terms.
Russia’s foreign trade surplus totalled USD167.5 bn and grew by USD33.2 bn or by 24.7% times in 2010 as compared with 2009. The surplus balance to 83.2% was formed in trade with the far abroad countries. The ratio of imports coverage by exports fell from 180.3% to 173.2%. The ratio of imbalance (the share of net balance in total trade turnover) was at 26.8% compared to 28.6% a year before. The share of exports in the Russian total foreign trade turnover reached 63.4%, while that of imports - 36.6% in 2010.
The share of the far abroad countries in the Russian total foreign trade turnover was equal to 85.4% in 2010 (85.4% in 2009), while that of the CIS - 14.6% (14.6%). The EU accounted for 49.0% (50.4%) of the foreign trade turnover, the APEC - for 23.3% (20.7%), the Euro-Asian Union - for 7.8% (8.7%).
Russia’s top trade partner is China - 9.5% of the total trade turnover in 2010 (8.4% in followed by Netherlands - 9.3% (8.5%), Germany - 8.3% (8.5%), Italy - 6.0% (7.0%), Ukraine - 5.9% (4.9%), Belarus - 4.5% (5.0%), Turkey - 4.0% (4.2%), the USA - 3.8% (3.9%), Japan - 3.7% (3.1%) and France - 3.6% (3.7%).
Under pressure of seasonal fluctuations of the markets of many commodities, political and economic instability in different regions of the world Russia’s foreign trade activity was of uneven nature in 2010 and reached its maximum size in December 2010 (USD66.0 bn) and its minimum size (USD37.5 bn) in January 2010.
Overall exports totalled USD396.4 bn, inclusive of exports to the far abroad countries - USD336.7 bn (up by 32.1%) and to the CIS countries - USD59.7 bn (up by 27.4%). Exports in natural terms in 2010 were up by 8.2%, 11.0% and down 7.2%, accordingly. The average export prices rose in 2010 by 19.8%, inclusive of the far abroad countries - by 19.0% and the CIS countries - by 24.6%.
The main export destinations were: Germany - 6.3% (6.2%), Ukraine - 5.8% (4.6%), Turkey - 5.1% (5.4%), China - 5.1% (5.5%), Belarus - 4.6% (5.5%), Poland - 3.8% (4.1%), the USA - 3.1% (3.0%) and Japan - 3.2% (2.4%).
In 2010 the share of mineral fuel and electricity in the Russian total exports made up 68.5%, metals and metal wares - 10.7%, chemicals - 6.3%, machines, equipment and vehicles - 5.5%, timber and pulp/paper products - 2.4%, foodstuffs and agricultural raw materials - 2.2%.
Russia’s export of all commodity groups, except foodstuffs, grew in 2010. Exports of foodstuffs and agricultural raw materials fell by 12.2% or by USD1213.5 million in 2010 mainly due to the ban on grain export.
The composition of major export commodities did not change considerably in 2010 in comparison with 2009 and includes energy sources (oil, natural gas, oil products, coal), electricity, other mineral products - 69.3%, metals (rolled steel and steel semi-products, unwrought aluminium and nickel, refined copper etc.) and precious metals and stones (mainly raw diamonds) -13.0%, round wood, sawn timber, wood pulp and paper - 2.4%. These three commodity groups accounted for 84.7% of Russia’s total exports in 2010. The share of products with high value added (machines, chemicals, ready made goods etc.) in the Russian total exports made up 13% in 2010.
Too high export concentration, when more than 75% of the Russian total exports belong to ten commodities, does not enable to meet world market fluctuations flexibly.
Exports of fuel and energy resources in value terms in 2010 went up by 33.1% compared to 2009. Exports of crude oil reached 246.8 mln t and fell in natural terms by 0.3% as against 2009, natural gas - 198.0 bn cubic meters (up by 9.4%), coal - 115.7 mln t (up by 10.0%). Exports of diesel fuel in natural terms went up by 4.1%, fuel oil - by 12.3%. Exports of motor gasoline fell by 34.2%. On the whole, Russia’s total exports of oil products reached 132.2 mln t in 2010 or rose by 6.2% compared to 2009.| Russia’s Major Export Commodities (% of total) |
||
|---|---|---|
| % of total | 2010 to 2009 (per cent points) |
|
| Crude oil | 34.4 | 1.1 |
| Natural gas | 13.9 | 0 |
| Oil products | 17.9 | 2.0 |
| Aluminium, unwrought | 1.6 | -0.1 |
| Steel semi-products | 1.8 | 0.2 |
| Rolled flat steel | 1.3 | -0.2 |
| Russia's Exports of Fuel/Energy Products | ||||||
|---|---|---|---|---|---|---|
| 2009 | 2010 | |||||
| I | II | III | I | II | III | |
| Crude oil, t | 247550364.8 | 406.5 | 33.4 | 246853524.7 | 545.4 | 34.4 |
| Far abroad | 211086812.0 | 420.2 | 34.8 | 223939958.0 | 557.2 | 37.1 |
| CIS | 36463552.8 | 327.5 | 25.5 | 22913566.7 | 429.7 | 18.2 |
| Oil products, t | 124529535.1 | 386.8 | 16.0 | 132238192.0 | 529.0 | 17.9 |
| Far abroad | 115511941.0 | 387.7 | 17.6 | 126615727.0 | 527.1 | 19.8 |
| CIS | 9017594.1 | 375.8 | 7.2 | 5622465.0 | 572.2 | 5.9 |
| Natural gas, mln cubic m | 180952.0 | 244070.0 | 14.6 | 198042.0 | 273552.0 | 13.9 |
| Far abroad | 150699.0 | 261001.8 | 15.4 | 152716.0 | 285061.6 | 12.9 |
| CIS | 30253.0 | 159728.1 | 10.3 | 45326.0 | 234772.9 | 19.7 |
| Coal, t | 105183531.7 | 70.1 | 2.4 | 115714978.3 | 79.4 | 2.3 |
| Far abroad | 96800291.0 | 70.0 | 2.7 | 102602176.0 | 78.3 | 2.4 |
| CIS | 8383240.7 | 71.3 | 1.3 | 13112802.3 | 87.9 | 2.1 |
| Electricity, mln kW-h | 17968.0 | 44034.8 | 0.3 | 19041.3 | 53922.3 | 0.3 |
| Far abroad | 14241.0 | 43785.5 | 0.2 | 18460.0 | 54207.0 | 0.3 |
| CIS | 3727.0 | 44987.6 | 0.4 | 581.3 | 44882.0 | 0.0 |
Russia’s merchandise imports in 2010 amounted to USD229.0 bn according to the customs statistics and rose by 36.8% as compared with 2009 (down by 37.3% in 2009 against 2008 mainly due to rising physical volumes.
Imports from the far abroad countries reached USD197.4 bn (up by 35.6%) and from the CIS countries - USD31.6 bn (up by 44.8%) in 2010. The share of the far abroad countries in total imports equalled to 86.2% and went down by 0.8 per cent point compared to 2009, while the share of the CIS countries reached 13.8% in 2009 against 13.0% in 2009.
The EU accounted for 41.8% of the RF total imports (45.1%), the APEC countries - 34.1% (30.9%), the Euro-Asian Union - 7.2% (7.1%), accordingly. Russia’s main import partners in 2010 were China - 17.0% (13.6% in 2008, Germany - 11.7% (12.7%), Ukraine - 6.1% (5.5%), the USA - 4.9% (5.5%), Japan - 4.5% (4.3%), France - 4.4% (5.0%), Italy - 4.4% (4.7%), Belarus - 4.3% (4.0%), South Korea - 3.2% (2.9%). These countries accounted for 60.5% of Russia’s total imports in 2010 compared to 58.2% in 2009.
Physical volume of Russia’s total imports increased in 2010 by 33.6%, inclusive of the far abroad countries by 34.3% and of the CIS countries by 28.6%, as compared with 2009.
In 2010 imports of machinery, equipment and vehicles amounted to USD101715.6 million and rose in value terms by 40.0% compared to 2009, inclusive of imports from the far abroad countries - by 38.4% and from the CIS countries - by 59.1%. The share of machines, equipment and vehicles in Russia’s total imports amounted to 44.8% in 2010 against 43.4% in 2009, in the Russian total imports from the far abroad countries - 47.0% (46.1%), from the CIS countries - 30.1% (25.9%) in accordance with the Russian customs statistics. There was rise in imports of all 1 enlarged commodity groups in 2010. Most rapidly were growing imports of fuels (by 42.9%), metals and metal wares (by 50.4%), chemicals (by 32.5%), textile, apparel and footwear (by 48.7%), machines, equipment and vehicles (by 40.0%). The commodity structure of the Russian imports in 2010 was as follows: machines, equipment and vehicles - 44.8%, foodstuffs and raw materials for their production - 15.9%, chemical products - 16.3%, metals and metal wares, including precious ones — 8.1%.
In 2010 Russia’s index of trade terms became favourable to Russia and reached 107.3 in comparison with 2009.
| Imports of Selected Consumer Goods1 | ||||||
|---|---|---|---|---|---|---|
| 2008 | 2009 | 2010 | ||||
| $ mln | % | $ mln | % | $ mln | % | |
| Cars | 30267 | 11.3 | 8505 | 5.1 | 11377.4 | 5.0 |
| Medicines | 7512.4 | 2.8 | 7135.3 | 4.3 | 9341.7 | 4.1 |
| Meat, frozen | 5258.6 | 2 | 4687.7 | 2.8 | 4725.1 | 2.1 |
| Leather footwear | 1890.2 | 0.7 | 1304.3 | 0.8 | 2325.2 | 1.0 |
| Furniture | 2413.8 | 0.9 | 1671.5 | 1.0 | 2263.5 | 1.0 |
| Beverages | 2621.3 | 1.0 | 1787.9 | 1.1 | 2263.2 | 1.0 |
| Fish, frozen | 1660.7 | 0.6 | 1777 | 0.9 | 1691.3 | 0.7 |
| Raw sugar | 940.9 | 0.4 | 504.7 | 0.3 | ||
| Citrus fruits | 95.3 | 0.4 | 1017.7 | 0.6 | 1274.5 | 0.6 |
| Apparel | 4528 | 1.7 | 3923.5 | 2.3 | 844.3 | 0.4 |
| Poultry meat | 1352.9 | 0.5 | 1131 | 0.7 | 940.5 | 0.4 |
| Tea | 511.9 | 0.2 | 500.4 | 0.3 | 563.2 | 0.2 |
| White sugar | 87.4 | 0 | 147.3 | 0.1 | 212.7 | 0.1 |
| Cigarettes | 156.2 | 0.1 | 133.5 | 0.1 | 128.1 | 0.1 |
| Sunflower oil | 177.3 | 0.1 | 35.5 | 0.0 | 119.0 | 0.1 |
| 1 Per cent of total imports. Source: Customs statistics | ||||||
The total sum of attracted foreign capital in Russia’s economy amounted in 2010 to USD114.7 bn compared to USD81.9 bn a year before, or by 40.1% more than in 2009. That is slightly less than in 2007 before the world crisis.
As usually, the main part of foreign capital inflow relates to the category of “other investment” - 87.0% of total foreign investment in 2009 or USD99.9 billion. Foreign direct investment in 2010 amounted to USD 13.8 bn or fell by 13.2% as against 2009. Portfolio investment in 2010 made up USD1.1 bn.
| Inflow of Foreign Investment in the RF (USD mln) |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2010/ 2009 |
|
| Total | 19780 | 29699 | 40509 | 53 561 | 55109 | 120941 | 103769 | 81927 | 114746 | - |
| Direct | 4002 | 6781 | 9420 | 13072 | 13 678 | 27797 | 27 027 | 15906 | 13810 | - |
| Portfolio | 472 | 401 | 3331 | 453 | 3182 | 4194 | 1415 | 882 | 1076 | - |
| Other | 15306 | 22517 | 30756 | 40126 | 38249 | 88950 | 75327 | 65139 | 99860 | - |
| % | ||||||||||
| Total | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 140.1 |
| Direct | 20.2 | 22.8 | 23.3 | 24.4 | 24.8 | 23.0 | 26.0 | 19.4 | 12.1 | 86.8 |
| Portfolio | 2.4 | 1.4 | 0.8 | 0.8 | 5.8 | 3.5 | 1.4 | 1.1 | 0.9 | 121.9 |
| Other | 77.4 | 75.8 | 75.9 | 74.8 | 69.4 | 73.5 | 72.6 | 79.5 | 87.0 | 153.3 |
| Source: Federal State Service of Statistics. | ||||||||||
The structure of these three kinds of investment is as follows: (% of total): foreign direct investment: contributions in the capital - 55.8; credits got from foreign co-owners - 33.3; other - 10.9; portfolio investment: shares and stocks - 32.0; bonds - 63.2; other - 4.8; other investment: trade credits - 17.6; other credits - 79.3; other-3.1.
Fall in foreign direct investment by 13.2% and the small share of foreign direct investment in the total amount of foreign investment inflow (12.1% - the worst indicator since 1995) reflect unfavourable terms of Russia’s investment climate, in the first place bureaucratic barriers and corruption. To eliminate these defects, the RF authorities worked out a Program of measures for improving an investment climate in Russia.
In particular, the program envisages measures on: simplifying immigration procedures; cutting down administrative barriers during implementation of investment projects; providing access to infrastructure; perfecting customs procedures; changing tax laws to stimulate investment in modernization and innovations; protecting investors’ rights.
It is supposed to work out a decree on the procedure of public discussion of regulation acts with the business community, a bill on removing state control over transactions of the strategic companies and a bill on considering complaints considering corruption etc. Besides, the Russian Ministry of Economic Development is charged with duties on considering legal acts of federal ministries, agencies, services for discovering rules and regulations preventing business and investment activities.
The accumulated foreign investments by January 1, 2011 are estimated at USD300.1 bn or 9% less than as on January 1, 2010.
The list of direct investor countries are as follows (in per cent of the total foreign direct investment in Russia in 2010): Cyprus - 25.0; Germany - 18.7; Netherlands - 11.0; France - 7.0; the UK - 4.2; Finland - 2.8; Austria - 2.7, the Virgin Islands (UK) - 2.2; the USA - 1.7 and Switzerland - 0.8. It is difficult to define what investors have a real foreign origin. Probably, real foreign investors are from Germany, France, Finland and the USA. Investment from the other countries has a Russian origin to a large extent.
Foreign direct investment in 2010 is directed mainly at companies engaged in manufacturing industries (35% of total FDI); operating with real estate and rendering involved services (11%); producing fuel and mineral resources (15%); wholesale and retail trade and repair services (14%); financial activities (6%); construction, transport and communication (each 3%). The total size of foreign direct investment in these kinds of activities exceeded USD 10 bn or 75% of total foreign direct investment.
| Jan-Dec 2009 million US $ |
Jan-Dec 2010 million US $ |
|
|---|---|---|
| Export from South Africa to the Russian Federation | 321,24 | 473,38 |
| Import from the Russian Federation into South Africa | 195,97 | 45,78 |
| TOTAL trade turnover: | 517,21 | 519,16 |
Source:
Foreign Trade of the Russian Federation
Annual Reports of 2009 and 2010 by the Federal Customs Service of the Russian Federation
Remarks:
- Fresh fruits (HS code 08) by 37,0 % (on 51,76 million US $) from 144,64 million US $ in 2009 to 195,94 million US $ in 2010. The share of fresh fruit export to Russia is still very high – about 42% out of total SA export to Russia. SA did not lose its share on the Russian market compare with other countries. For instance: SA export of oranges moved the 4th place in 2009 to the 3rd to the Russian market, after Turkey, Morocco and took over the traditional partner - Egypt.
- Wines (HS code 22.04) increased by 54,0 % (on 11,59 million US $) from 7,50 million US $ in 2009 to 11,54 million US $ in 2010. Import of SA wines is on the 10th place amongst 37 countries exporting wines to Russia.
- Import of Ores, slag and ash, Chromium ores and concentrates (HS code 26.02) increased by 327% (on 54,16 million US $) from 16,54 million US $ in 2009 to 70,70 million US $ in 2010.
Russia is in a transitional period now, which provides not many reasons for attracting investment. However, under V. Putin‘s presidency the business climate and economic stability are improving thus making Russia more attractive for investment.
Below the sectors, where can be considered by the business communities of both countries as the area for the joint investments:
As a world leader in the efficient exploitation of natural resources, particularly in mining and metals, South Africa is well placed to share its technical expertise with Russian resources clients. Russia is among the world’s most significant markets for South African mining companies with unique expertise, service and products in areas such as:
Russian hotel industry needs to be developed, especially in the 3 star hotels for mid class tourists. Being attracted by the promising possibilities in the hotel sectors, the SA Protea Hotels has established its representation in Russian Regions.
Barloworld took a decision to go into Russia, Siberia 5 years ago. It is the second year of profit in Siberia, Barloworld Equipment is still in the process of developing the market to understand what a Western product can do. As the Siberian market is still dominated by former eastern bloc manufacturers, whose products are not as reliable or as well-supported.
South African Eskom Enterprises and the Russian company Factor first established relations in December 2000. In 2004 the Eskom Enterprises with annual turnover over R 2,5 billion had identified four areas of co-operation with several Russian companies. These included research and development, equipment supply between Russia and South Africa and projects in third countries.