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$27,8001 (S$37,500) (PPP) in 2017. Russia’s economy is now stable and growing, after emerging from a two-year recession triggered by falling oil prices and economic sanctions. Its economic growth is moderate at around 1.7% in 2017, and the World Bank estimates it to remain in the range of 1.5-1.9% from 2018 to 2019. Due to recent reforms, it is now easier to do business in Russia. The World Bank places it 35th out of 190 economies in 2017’s Ease of Doing Business global ranking. 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.
1CIA World Factbook
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 slump 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.
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. 2018 marks 50 years of diplomatic relations and good economic ties between Singapore and Russia. Bilateral trade grew at a compounded annual growth rate of more than 10% between 2007 and 2016 to reach S$4.56 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, if you act fast. Find out how your business can capitalise on Russia’s economic recovery and growing consumer demand.