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.
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.
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.