Russia Country Profile

Snapshot of the Russia Country Profile


Russia has witnessed rapid economic growth over the past several years. The Russian economy grew by a rate of over 5% in 2008, followed by a substantial decrease of almost 8% in 2009 as a result of the global financial crisis. Encouraged by reforms, foreign direct investment rose by approximately 300% between 2005 and 2007, but declined sharply in 2008 due to a dramatic drop in the price of oil and the global financial crisis, contributing to a decline in investor confidence, a substantial pull-out of investor capital and a 70% fall of the Russian stock market. The Russian government has since come forward with a massive economic stimulus package, but corruption and lack of trust in institutions continue to hamper domestic and foreign investor confidence. An important part of Russia's economic recovery will have to come from seeing through the economic priorities outlined by President Medvedev, including improving infrastructure, innovation, investment, and institutions, reforming the tax system and banking sector, combating corruption, and improving the judiciary.

Positive developments in relation to corruption and investment:

  • In December 2008, the Duma passed a package of anti-corruption legislation, including a more simplified Criminal Code to make it easier to bring corrupt judges to account.
  • The Russian government is currently undertaking a comprehensive reform specifically aimed at modernising public administration. The measures, as foreseen in the reform programme, aim at attacking the roots of the problem of corruption.
  • Increase in openness to independent domestic and international monitoring and prevention recommendations marks a positive shift in the Russian government's approach to tackling corruption.

Risks of corruption:

  • Companies in Russia continue to report that they are faced with a complex business environment and a high volume of demands for bribes.
  • Large companies cite corruption as a major obstacle to doing business in Russia. Problems include the inconsistent application of laws and regulations on a non-transparent basis, and the weak enforcement of laws and court decisions.
  • The government continues to exert control on the economy's strategic sectors, such as energy, transportation and car manufacturing and to gear its economic policy towards a few major economic actors.