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Market Profile

Population (2020): 144.7 million   
GDP (2020): US$1.48 trillion  
World Bank “Ease of Doing Business” Rank (2020): 28th
Bilateral Trade with Singapore: S$7.38 billion   
Trading Partner Rank (2020): 4th 
 

Why Russia

Russia’s Economic Recovery
 

Russia is one of the world’s largest economies and has the highest per capita GDP among the BRIC economies (Brazil, Russia, India and China) at US$11,5111 (S$37,500) (PPP) in 2019. 

Having been through various downturns particularly on account of externalities like sanctions and fluctuating oil prices, Russia’s economy appears to have become increasingly resilient. This is on account of a variety of monetary and fiscal policies which have enabled a stronger self-sufficient domestic economy with a manageable unemployment and inflation rate. Furthermore, Russia has begun diversifying its portfolio of exports to reduce the risk of price shocks from key resources such as energy products. In recent years (Pre-Covid), Russia has had an average GDP growth of 2% and is expected to recover by 2022. Close to 60% of the economy is service oriented.
 
A key growth sector is the innovation space where Russia has invested in the development of startups to drive innovation and enhance corporate capabilities. This includes innovation nodes such as the Skolkovo Innovation Center in Moscow or Academpark in Siberia. These nodes facilitate market entry into Russia and the region, enable collaboration and present investment opportunities.  Russian startups have become globally known from the various nodes that they evolved out of e.g. Telegram (Dubai), Humaniq & Revolut (London), iFarm (Finland), Novakid (Poland) and GroupIB (Singapore).  

Although Russia is commonly viewed as a difficult market for Singapore companies to penetrate, due to its language and cultural differences, it is a nevertheless a modern and vibrant market you should not dismiss.

1 Statistica

Growing Consumer Spending
 

Russia is one of the world’s leading producers of oil and natural gas and has traditionally relied on commodity trade for growth. 

Much has changed in the business landscape since the commodity supercycle settling and the impact of economic sanctions. With a growing middle class and private sector, consumer spending is expected to drive its GDP growth in the coming years. Its consumer market continues to grow at a rate exceeding that of most mature markets.

The Russian market, especially in Moscow and St. Petersburg, is vibrant and business is growing. Russian consumers are discerning, cost-conscious, but also loyal. Singapore companies are well-placed to offer goods and services at high standards, and at business-friendly costs to meet increasing local demand. 

Springboard to Eurasian Markets
 

Russia has close economic links with Central Asia, which you can leverage to access markets in the region. Russia is a member of the Eurasian Economic Union, which includes Kazakhstan, Kyrgyzstan, Armenia and Belarus. This is a single economic market of over 183 million people with a GDP of over US$4 trillion (S$5.4 trillion) (PPP). Member countries enjoy free transit of goods, services, capital and workers among themselves. 

Setting up your business in Russia thus gives you an ideal base to expand into Central Asia and eastern Europe. 

Synergy in Singapore-Russia Partnerships
 

As the world’s largest country by land area and ninth largest by population, Russia offers similarly vast opportunities. It has the world’s largest reserves of mineral and energy resources, and is also the largest consumer market in Europe with a population of over 142 million, and a rising middle class.

Since 1968, Singapore and Russia have established diplomatic relations and good economic ties. Bilateral trade grew at a compounded annual growth rate of more than 10% between 2010 and 2014 to reach US$7.9 billion (S$10.7 billion). There are more than 500 Russian companies operating in Singapore. Likewise, Singapore businesses have made inroads to Russia.

If you are keen to tap Russia’s economic potential, focus on opportunities in Russia’s consumer, trade and technology sectors. As Russia is pivoting towards Asia, Singapore companies can also partner Russian companies for business in the region.


 

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(Last updated on 02 June 2022 08:38:32)