→ Main article: Economic policy of Russia and Overall economic development of Russia.
General
Russia is a developed industrial and agricultural country. The country is also a founding member of the Eurasian Economic Union, which has existed since January 1, 2015. The leading industrial sectors are mechanical engineering and ferrous and non-ferrous metal processing. The chemical and petrochemical industry as well as the wood, light and food industry are also well developed.
Russia's gross domestic product was approximately EUR 1,192 billion in 2015. The gross domestic product per capita in the same year was EUR 8,137. The service sector contributes 62.6 percent to GDP. The industrial secondary sector accounts for about 32.7 percent, and the agricultural sector (construction and agriculture) for 4.7 percent. The World Bank estimated that about a quarter of total economic output is provided by commodity production.
According to a study by the bank Credit Suisse, the average wealth ownership per adult person in Russia is 16,773 US dollars. However, the median is only 3,919 US dollars (world average: 3,582 US dollars), which indicates high wealth inequality. More than 70% of the Russian population owns less than $10,000 in assets. Russia ranked 19th in the list of countries by total private wealth, one place ahead of Indonesia and one behind Sweden. In 2017, Russia was the country with the fifth highest number of billionaires (96 in total). The so-called oligarchs in the country have partly become a symbol of corrupt structures and inequality.
The total number of employees is 73.5 million (2006). 30 percent of the workforce worked in industry in 2005. Agriculture employed 10 percent, services 22 percent, and the public sector another 22 percent of all workers. In 2013, Russian Deputy Prime Minister Olga Golodez said only 48 million (down from 86 million) working people were visible to the government; depending on the estimate, the shadow economy accounted for half of economic output. Small and medium-sized enterprises contributed one-fifth, whereas state-owned corporations contributed 70 percent. Even pensioners who continued to work because of minimal pensions belonged to the army of self-employed small earners who hardly ever declared their income: Tax morale was at an all-time low in view of the politicians' well-known corrupt excesses.
After years of upswing, the Russian economy was in recession around 2015/16. After growing by 0.6% in 2014, the Russian economy contracted by 3.7% in 2015. For 2016, a decline in economic output of 0.2% was officially reported. The very low oil price, the fall in the value of the ruble and Western sanctions in the wake of the Ukraine crisis were cited as the main reasons for the recession. However, the Russian economy is also said to have fundamental structural problems. Furthermore, Russia had to contend with increased inflation rates of up to 15 percent in the case of 2015. Inflation fell again in 2018 to around three percent. In the Global Competitiveness Index, which measures a country's competitiveness, Russia ranks 38th out of 137 countries (as of 2017/18). In the Economic Freedom Index, the country ranked 114th out of 180 countries in 2017.
After the transformation crisis
Russia's overall economic development after the dissolution of the Soviet Union was initially characterized by a drastic slump in production. The loss of well-rehearsed trade relations within the Soviet Union contributed to this. The transition from a planned economy to a market economy was difficult and was successful only in some areas. Overall, gross domestic product fell by a good 40 percent. Shortly after the beginning of the Asian crisis, the Russian crisis began in the fall of 1997. On August 17, 1998, Russia declared state bankruptcy and had to abandon the ruble's dollar peg. The "policy of the minimal state" under Yeltsin meant that the federal government was unable to collect taxes and ensure legal security. This changed under the presidency of Vladimir Putin beginning in 2000. In order to regain political control in the state, he strengthened the state apparatus at the expense of the oligarchs' influence.
Putin ran a state-led corporatist economy in Russia until 2008. In 2007, he introduced by law six institutions to bundle state activities in strategically important areas, under the sole leadership of the president. These include nuclear technology at Rosatom, the bank for foreign trade VEB, the reform fund for real estate, Rusnano, or the arms conglomerate Rostec, plus Olimpstroi, the state company dissolved in 2014 for construction of the 2014 Sochi Olympics. VEB had emerged from the USSR's foreign trade bank. One of the things Prime Minister Medvedev criticized about these state conglomerates created by law was the use of state property or state funds for their creation, which led to hidden privatization. A 2009 audit of the corporations by Medvedev found abuse and inefficiency. President Medvedev, in his address to the nation in November 2009, called the organizational form of the corporations "without perspective." A few days later, Prime Minister Putin replied that state corporations were simply a necessity and stressed that there was unanimity on this among the state leadership.
The first four years of Putin's presidency saw the introduction of a flat rate for income tax (see Tax Law (Russia)), full convertibility of the ruble and a three-year budget (this until the financial problems in 2015). In order to benefit from the revenues of the energy sector, private companies were pushed back from this sector. The state also expanded its influence outside the energy sector. The government promoted the formation of large state-owned corporations to dominate strategic industries. For example, private mechanical engineering and automotive companies were taken over by state-owned enterprises and supported by subsidies so that they could be modernized.
Large production capacities from the USSR era were underutilized, so the Russian government turned to restoring these capacities to full capacity through a demand-oriented economic policy using expansionary, growth-oriented monetary policy. This brought double-digit inflation. The goal set by President Putin of doubling GDP within ten years was to be achieved by means of a government spending program. To this end, public sector salaries, pensions, other social benefits and spending on housing were increased. The social program was made possible by the oil boom, which, in addition to high additional revenues for the state, enabled a reduction in foreign debt, which still amounted to $166 billion in 2000. Part of the oil revenues flowed into the stabilization fund set up in 2004 to cushion declining government revenues and mitigate possible inflation. This stabilization fund was split into a reserve fund and a prosperity fund (for pension protection) in 2008. In 2011, the prosperity fund amounted to 68.4 billion euros, the reserve fund to 19.9 billion euros.
The Russian economy had recovered quickly from the production slump in the wake of the 1998 financial crisis, as the significant devaluation of the ruble that occurred in 1998 boosted the Russian economy and made foreign goods more expensive, so that products from Russia became more competitive there. In terms of foreign trade, however, the Russian economy became even more dependent on the energy sector. Despite a sharp rise in investment, Russia invested too little by international standards. Investors criticized the lack of legal security, widespread corruption, excessive bureaucracy and the poor performance of the Russian banking system.
In the international economic crisis
In the wake of the international economic crisis, the Russian economy has shown clearly negative developments since mid-2008, largely due to its heavy dependence on the raw materials sector. Due to the drastic drop in the price of oil and natural gas, government revenues fell. The global financial crisis hit Russia hard in 2009. Russia's anti-crisis policy prevented major bank collapses, so the Russian financial system is once again considered stable. Mandatory deposits with the central bank were increased, and banks received state aid. The Russian Central Bank used nearly $300 billion in reserves to support the ruble, which had come under devaluation pressure as a result of foreign capital withdrawals. In 2010 and 2011, an economic recovery began in Russia.
This crisis made it clear that the fixation on raw material wealth was leading the country into a dead end and that dependence on world market prices for oil, natural gas or metals was too high. Already at the beginning of the 21st century, an intensive discussion about special economic zones had begun in Russia. Under Vladimir Putin, a corresponding law on special economic zones was passed in the Russian Federation in 2005. By the end of 2009, 15 of these zones had been designed and confirmed, including two industrial special economic zones (Yelabuga, Lipetsk), four technology-oriented special economic zones (Moscow, St. Petersburg, Dubna, Tomsk) and seven zones for tourism and recreation. Interest rates were lowered to allow investment in production. The inflation rate reached its lowest level in 20 years in 2011. The government endeavored to keep price-driving factors such as the rise in the price of fuel and electricity under control via quarterly agreements with suppliers.
While the country was still the 22nd largest economy in 1999, in 2012 it ranked ninth in the world in terms of nominal GDP. While the value of Russia's GDP in relation to Germany's was 21.7 percent in 2004, it was already 51.7 percent in 2011. Accession to the World Trade Organization (WTO) took place in 2012 after 18 years of negotiations, as a result of which import tariffs fell and the pressure to modernize the domestic economy increased. In 2015, Russia's economic performance was again behind Italy's, ranking 10th or 11th. Until 2018, the government had never dared to raise the retirement age, which Stalin had set in 1932 - but pensions, which women receive from age 55, men from 60, are so low that many earn extra money in the shadow economy. At the same time, the labor market lacked workers.
Selected key figures of the Russian economy
| Year | GDP (in USD billion KKB) | GDP per capita (in US dollars KKB) | GDP growth (real) | Inflation rate (in percent) | Unemployment rate (in percent) | Public debt (in % of GDP) | Budget balance (in % of GDP) | Trade balance (in % of GDP) |
| 1992 | 1.703,0 | 11.482 | k. A. | k. A. | 5,2 % | k. A. | k. A. | ▼−1,3 % |
| 1993 | ▼1.591,9 | ▼10.724 | ▼−8,7 % | ▲874,6 % | ▲5,9 % | k. A. | k. A. | ▲1,3 % |
| 1994 | ▼1.419,3 | ▼9.563 | ▼−12,7 % | ▲307,6 % | ▲8,1 % | k. A. | k. A. | ▲2,6 % |
| 1995 | ▼1.389,5 | ▼9.370 | ▼−4,1 % | ▲197,5 % | ▲9,4 % | k. A. | k. A. | ▲2,1 % |
| 1996 | ▼1.363,8 | ▼9.210 | ▼−3,6 % | ▲47,7 % | ▲9,7 % | k. A. | k. A. | ▲2,6 % |
| 1997 | ▲1.406,3 | ▲9.517 | ▲1,4 % | ▲14,8 % | ▲11,8 % | k. A. | k. A. | ▬0,0 % |
| 1998 | ▼1.345,6 | ▼9.130 | ▼−5,3 % | ▲27,7 % | ▲13,3 % | k. A. | ▼−7,4 % | ▲0,1 % |
| 1999 | ▲1.452,9 | ▲9.889 | ▲6,4 % | ▲85,7 % | ▼13,0 % | 92,1 % | ▼−3,6 % | ▲12,6 % |
| 2000 | ▲1.635,3 | ▲11.170 | ▲10,0 % | ▲20,8 % | ▼10,6 % | ▼55,7 % | ▲3,1 % | ▲16,3 % |
| 2001 | ▲1,757.7 | ▲12,054 | ▲5,1 % | ▲21,5 % | ▼9,0 % | ▼44,3 % | ▲3,0 % | ▲9,7 % |
| 2002 | ▲1.869,3 | ▲12.875 | ▲4,7 % | ▲15,8 % | ▼8,0 % | ▼37,5 % | ▲0,7 % | ▲7,4 % |
| 2003 | ▲2,046.7 | ▲14,156 | ▲7,3 % | ▲13,7 % | ▲8,2 % | ▼28,3 % | ▲1,3 % | ▲7,2 % |
| 2004 | ▲2,253.9 | ▲15,647 | ▲7,2 % | ▲10,9 % | ▼7,7 % | ▼20,8 % | ▲4,6 % | ▲9,2 % |
| 2005 | ▲2.474,8 | ▲17.232 | ▲6,4 % | ▲12,7 % | ▼7,2 % | ▼14,8 % | ▲7,6 % | ▲10,3 % |
| 2006 | ▲2.758,8 | ▲19.249 | ▲8,2 % | ▲9,7 % | ▼7,1 % | ▼14,8 % | ▲7,8 % | ▲8,7 % |
| 2007 | ▲3.073,9 | ▲21.473 | ▲8,5 % | ▲9,0 % | ▼6,0 % | ▼8,0 % | ▲5,6 % | ▲5,2 % |
| 2008 | ▲3,298.7 | ▲23,054 | ▲5,2 % | ▲14,1 % | ▲6,2 % | ▼7,4 % | ▲4,5 % | ▲5,8 % |
| 2009 | ▼3.063,8 | ▼21.411 | ▼−7,8 % | ▲11,7 % | ▲8,2 % | ▲9,9 % | ▼−5,9 % | ▲3,8 % |
| 2010 | ▲3.240,9 | ▲22.639 | ▲4,5 % | ▲6,9 % | ▼7,4 % | ▲10,6 % | ▼−3,2 % | ▲4,1 % |
| 2011 | ▲3.475,4 | ▲24.259 | ▲5,0 % | ▲8,4 % | ▼6,5 % | ▲10,8 % | ▲1,4 % | ▲4,7 % |
| 2012 | ▲3.670,4 | ▲25.592 | ▲3,7 % | ▲5,1 % | ▼5,5 % | ▲11,5 % | ▲0,4 % | ▲3,2 % |
| 2013 | ▲3.796,8 | ▲26.440 | ▲1,8 % | ▲6,8 % | ▬5,5 % | ▲12,7 % | ▼−1,2 % | ▲1,5 % |
| 2014 | ▲3.892,0 | ▲27.072 | ▲0,7 % | ▲7,8 % | ▼5,2 % | ▲15,6 % | ▼−1,1 % | ▲2,8 % |
| 2015 | ▼3.835,8 | ▼26.658 | ▼−2,5 % | ▲15,5 % | ▲5,6 % | ▲15,9 % | ▼−3,4 % | ▲4,9 % |
| 2016 | ▲3.877,0 | ▲26.930 | ▼−0,2 % | ▲7,1 % | ▼5,5 % | ▼15,7 % | ▼−3,6 % | ▲1,9 % |
| 2017 | ▲4.007,8 | ▲27.834 | ▲1,5 % | ▲3,7 % | ▼5,2 % | ▲17,4 % | ▼−1,5 % | ▲2,2 % |
After the annexation of Crimea in 2014
→ Main article: Russian economic crisis 2015
As a result of the sanctions imposed by the West due to Russia's annexation of Crimea and the war in Ukraine fed by Russia since 2014, economic development stagnated in conjunction with a collapse in the price of oil. The structural problems of the Russian economy, which had been geared to commodity exports for years, became accentuated. In August 2015, the NZZ wrote in a comparison with the ruble crisis of 1997: "Today the situation is less threatening, but the chances of improvement are lower"; thus, the ruble weakness could not be used to modernize and diversify the economy due to financial restrictions. Russian household income in 2015 fell by an average of 8.5 percent, while food prices rose by as much as 25 percent. Annual inflation in 2015 was 12.9 percent. A capital amnesty was supposed to bring money back to Russia starting in December 2014. While presidential spokesman Peskov spoke of an absolutely one-time offer valid for one year when it was introduced, the amnesty was extended to June 2016 in December 2015 and renewed in early 2018 following new U.S. sanctions.
All government spending had to be cut, only armaments were not affected. Russian Prime Minister Medvedev had repeatedly stated that the country would have to live with the Western sanctions "indefinitely." Economic development remained paralyzed because the Putin regime's techniques of staying in power prevented not only political but also economic reforms. The share of the state economy increased, the shadow economy flourished, and real incomes had fallen several times between 2014 and 2018. A tax rate of 0 percent for 2017/2018 should have encouraged self-employed workers to register their activities; of the presumably approximately nine million such workers, just 936 had registered. According to a renewed legislative proposal of 2018, these small earners were to be stripped of all their earnings if the activity was discovered, i.e. a harsher penalty than those earning good money would have to face. Opening a business was not desirable for the majority of Russians interviewed in February 2019, as it was not possible to do business without cheating. Foreign direct investment, which had totaled $69 billion in 2013, had fallen to well below $5 billion by 2018, according to Le Monde.
In July 2018, it was decided to increase the VAT by two percent, making it 20 percent from January 1, 2019.
Agriculture and raw materials management
Russia's natural resources are an important basis for the country's economy. Russia is home to 16 percent of all the world's natural mineral resources, including 32 percent of all natural gas reserves (first place in the world), 12 percent of all petroleum reserves, which are found in particular in Western Siberia, Sakhalin Island, North Caucasus, the Komi Republic, and the petroleum areas in the Volga-Ural region (Caspian depression). With the strong growth of oil exports with rising oil prices from 2002 to 2011, the importance of production especially of oil and gas in Russia had grown and played an important role in the economy outside Russia as well. Russian companies such as Gazprom, Rosneft and Lukoil are involved in oil and gas production, which mainly takes place in the northern and eastern parts of the country.
With its gold reserves, Russia ranks third in the world. The diamond deposits in the northeast Siberian region of Yakutia are world-famous. Since 1996, diamonds have been mined here in one of the world's largest kimberlite deposits, in Mirny.
Russia's share of world reserves of iron and tin is over 27 percent, nickel 36 percent, copper 11 percent, cobalt 20 percent, lead 12 percent, zinc 16 percent, and platinum group metals 40 percent. 50 percent of the world's known coal deposits are found in Russia. In line with mineral deposits, hard coal and iron ore mining play a very important role in Russia's economy. Larger ore deposits are found mainly in the old-folded mountains (Chibins on the Kola Peninsula, Urals, Altai, Sayan Mountains as well as other Siberian mountain ranges). Deposits of hard coal are found in some promontories of these ranges, mainly in the Urals (including coal deposits of Workuta) and in the Donets Basin on the border with Ukraine. Coal mining suffered from a lack of investment and has lost importance compared to the Soviet period.
The timber industry is mainly present in the northwest of the European part, in the central Ural Mountains, in southern Siberia and in the south of Far Eastern Russia. Russia has about one-fifth of the world's forest cover and about one-third of the world's coniferous forest cover; most of Russia's timber production is softwood, mainly from pines, firs, and larches. The most important hardwood for trade is birch.
Agriculture remains an important sector of the Russian economy. Once the breadbasket of Europe, Russian agriculture suffered a drastic slump in agricultural production in the 1990s - but as early as the 1980s, Russia was the world's most important importer of wheat. In 2009, the production value of Russian agriculture was again the equivalent of 38 billion euros. In 2016, President Putin underlined the will to be an agricultural export nation. Of the record wheat harvest of 75 million tons in 2016, nearly 7 million tons (similar to 2015) could be exported. The state agricultural transport agency Rusagrotrans is responsible for transportation. The value of exported agricultural goods was $17 billion in 2016. Conditions for agriculture are good, especially in the European part of Russia and in southern Russia; Russia's black soil area is the largest in the world. Agricultural land is 219 million hectares, or 13 percent of Russia's land area. Of this, 122 million hectares is arable land, which is nine percent of the world's arable land. More than 80 percent of the sown land is located along the Volga River, in the North Caucasus, in the Urals, and in Western Siberia within the so-called agricultural triangle. Arable farming accounts for 36 percent of Russia's gross agricultural production, and animal husbandry for over 60 percent. The main agricultural products in Russia are cereals, sugar beets, sunflowers, potatoes, and flax. Inland fisheries provide sturgeon, the coveted Russian caviar. During the transformation period between 1990 and 1997, pig and poultry stocks fell by almost half. Since then, Russia has imported some of its food. It was the Russian government's goal even before, but especially since its counter-sanctions against the West following the annexation of Crimea in 2014, to increase its ability to be self-sufficient and reduce its dependence on imports. The population of cattle is 12.1 million head, pigs 7 million, and sheep and goats 4.6 million. Cattle breeding is mainly carried out in the Volga region, Western Siberia, and the European center; pig breeding is also found in the Volga region, but also in Northern Caucasia and the Central Black Earth region. Sheep breeding is concentrated in the regions of Eastern Siberia, Northern Caucasia and the Volga region.
Energy supply
→ Main article: Energy industry of Russia
Thermal power plants fueled by oil, natural gas or coal generated around 63 percent of the total electricity production of around 851 billion kilowatt hours in 2003. Hydroelectric power plants accounted for 21 percent and nuclear power plants for 16 percent. The Russian government plans to double the share of nuclear power in electricity generation to about one-third by 2020 in order to be able to export even more oil and natural gas. The power grid and most large power plants are still under state control. In order to benefit from the revenues generated by the energy sector, Russian policy has been to reassert state control over the energy industry and to push back private companies from this sector. This was achieved through the breakup of the oil company Yukos and the takeover of the oil company Sibneft by the semi-state-owned natural gas company Gazprom. Among the largest gas and oil production companies today is Surgutneftegas, where President Vladimir Putin controls 37 percent of the shares. All Russian nuclear power plants are owned by the state-owned company Rosatom and operated by Rosenergoatom, also a state-owned company. Until 2008, the largest share of electricity production was held by Unified Energy System, which was more than 50 percent owned by the Russian state and has since been split into smaller companies.
Industry, services and foreign trade
In addition to the old industrial areas of Moscow, Nizhny Novgorod, Saint Petersburg, Saratov, Rostov and Volgograd, further industrial sites have been established since World War II, preferably in the Asian part of the country. Heavy industry is concentrated in the Urals around Ekaterinburg. Russia plays a leading role in the global production of steel and aluminum. In recent years, world-renowned steel groups with high financial strength have been formed in Russia. These are, for example, Evraz, Severstal, Magnitogorsk Iron and Steel Works and Novolipetsk Steel, which are among the world's 30 largest steel companies. Important centers of heavy industry are Magnitogorsk, Chelyabinsk, Nizhny Tagil, Novokuznetsk, Cherepovets and Lipetsk.
Numerous machine and vehicle industries produce in the old main industrial centers of Moscow, the Volga region, the Northwest and the Urals, but equipment and plant manufacturing is also located here. Several branches of manufacturing, such as machine building, the automotive industry and the defense industry, including the aviation industry, fell into a deep crisis after the end of the Soviet Union. Production declined sharply. In the 2000s, however, the manufacturing industry started to pick up again. Market shares were regained, especially in markets in the CIS, and new markets were found in Asia because some Russian products were able to distinguish themselves as simpler and cheaper than competing Western products. Domestic production of machinery and equipment reached a volume of around 63 billion euros in 2006. In order to push the necessary modernization in the machine building sector, the state controls the further development of machine building from above. This included the establishment of the state holding company Rostechnologii, into which state shares of almost 500 companies (defense companies, airlines, truck and railcar manufacturers and machine builders) were brought.
| Production of selected products |
| Product type | 2005 | 2011 |
| Iron ores | 82.5 million t | 100 million t |
| Coal | 299 million t | 335 million t |
| Pig iron | 66.2 million t | 48.1 million t |
| Oil | 470 million t | 511 million t |
| Natural gas | 641 million m³ | 670 million m³ |
| Cement | 48.7 million t | 53.7 million t (2008) |
| CAR | 1.068 million pcs. | 1.738 million pcs. |
| TRUCK | 0.204 million pcs. | 0.249 million pcs. |
| Power generation | 953 TWh | 1052 TWh |
Aircraft manufacturing was one of the most important and technically most advanced branches of Russian industry. After the breakup of the Soviet Union, the production chains between the former Union republics were interrupted. This had a profound negative impact on Russian aircraft manufacturing. The main developers and producers of aircraft in Russia were merged into OAK in 2006. In 2010, OAK delivered 75 aircraft with revenues of four billion U.S. dollars. The best known Russian car manufacturers are AwtoWAS, KAMAZ, Ischmash or the GAZ Group. Very often you can still see the Russian-made car brands Shiguli, Moskvich, Lada Niva and Oka, as well as the trucks KAMAZ, Ural and others. Meanwhile, Russian car manufacturers cooperate with foreign groups. Currently, Volkswagen Group Rus cooperates with GAZ, Ford with Sollers, Renault-Nissan and AwtoWAZ, and General Motors (GM) with Avtotor. As a result, new assembly plants have been and are currently being built in Kaluga, Nizhny Novgorod, Togliatti, St. Petersburg and Kaliningrad. Russia's defense industry is coordinated by the state arms exporter Rosoboronexport. Rosoboronexport coordinates the work of the various defense companies and combines them into a single group through shareholdings.
The chemical industry of Russia is one of the main branches of the national economy of Russia, the share of which in the volume of goods production reaches six percent. The chemical complex of Russia includes 15 large industrial groups specializing in the output of a diverse production. The leading enterprises in this sphere are the highly profitable, petroleum processing enterprises and producers of chemical fertilizers. In addition, the production of chemical fibers, plastics and car tires are strongly developed in Russia. Russia's economy is also characterized by the production of building materials, light industry (mainly textile industry) and food industry.
The leading local retail chains include, by a wide margin, the X5-Retail Group (which includes the Pyatyorochka and Perekryostok chains), Magnit; among the international chains, the Metro Group and Auchan lead the way. The banking market is dominated by state-owned institutions such as Sberbank, WTB, Rosselchosbank and Vneshekonombank. Sberbank alone, the former Soviet Union Workers' Savings Bank, holds about half of all savings deposits. Only Sberbank has a nationwide branch network. The share of state-controlled banks in the total market averages about 50 percent. The largest Russian private banks (Gazprombank, Alfa Group, MDM Bank, Rosbank) are part of industrial holding companies and perform mainly holding company functions.
In terms of supply structure, Russia's most important trading partner is Germany, which primarily supplies Russia with finished industrial products such as machinery, plant and cutting-edge technology. Russia, in turn, is Germany's largest supplier of crude oil and covers around one-third of Germany's natural gas requirements. German-Russian trade rose by 8.4% in 2018 to 61.9 billion euros. German imports from Russia increased by 14.7% year-on-year and amounted to around 36 billion euros. Exports to Russia also increased by 0.6% to 25.9 billion euros. In 2010, the People's Republic of China replaced Germany as the most important foreign trade partner, while the Netherlands, Ukraine, Italy, Belarus and Turkey are also important for Russia. Russia is already the world's second largest exporter of crude oil and the world's largest exporter of natural gas. Exports of energy sources and electricity account for 62.8 percent of total exports (metals, metal products: 9.9 percent, chemicals: 4.1 percent). Russia's share of global trade in goods, however, is comparatively small despite its significant position as a supplier of raw materials. It amounts to two percent, just under a third of Germany's share.
Russia's trade in goods with foreign countries was down in 2019. On a US dollar basis, trade turnover fell by 3.1 percent year-on-year, amounting to the equivalent of around 595 billion euros. Imports of goods and services increased by 2.2 percent, while exports declined by 6 percent. For the first time in ten years, exports thus put the brakes on GDP growth.
Tourism
→ Main article: Tourism in Russia
Tourist highlights of Russia
The country has natural landscapes worth seeing, including UNESCO World Natural Heritage sites, as well as sights of high cultural value. In 2010, 2.4 million foreign tourists visited Russia, while 13.1 million Russians traveled abroad for recreation. Domestic tourism brought it to 29.1 million travelers. Although the flow of tourists from Asia and South America is increasing, guests from Europe - with Germany in the lead - make up the majority of visitors to Russia. Thus, the number of vacation and business travelers entering the country has also risen steadily; in 2002, around 360,000 Germans visited the country; in 2008, 558,000 German visitors came to Russia. However, only 66,000 of these were vacation trips by Germans and the rest were business trips and family and friend visits. In 2017, 580,000 Germans visited the Russian Federation. Individual tourists were often deterred by visa procurement and language barriers, while the country is more popular with tour groups.
Tourists have long been put off by an unattractive brand image that "Russia is an uneasy country" and "not ready to receive tourists. That the people there are unfriendly and that danger lurks all around," Alexander Radkov, head of the state tourism agency Rostourismus, opined in 2012. Despite increased activities by the Federal Tourism Agency, an effective PR and marketing strategy that could influence the country's poor image in the West, caused among other things by media coverage that mainly includes news about attacks, corruption and lack of freedom, is still lacking.
Tourism in Russia is mainly concentrated in the two metropolises of Moscow and Saint Petersburg. Saint Petersburg is considered the Venice of the North and has a rich cultural offering and a historic city center that is a UNESCO World Heritage Site in its entirety. Typical of St. Petersburg are the White Nights with the raised Neva bridges from late May to mid-July. In addition, there are boat trips on the Volga River and sightseeing tours of ancient Russian cities northeast of Moscow, the so-called Golden Ring with more than 20 cities. Nature vacations are possible especially in Karelia and the Altai Mountains (World Natural Heritage). The Trans-Siberian Railway (Transsib) covers about 9300 kilometers from Moscow via Ekaterinburg, Novosibirsk, the capital of Siberia, Irkutsk, which is also called the "Paris" of Siberia, as well as the region around Lake Baikal, also a UNESCO World Natural Heritage Site, to Vladivostok. The Transsib is traveled by individual tourists in the regular trains of the Russian railroads as well as by group travelers who book trips in special trains.
Kaliningrad, formerly Königsberg, is also attracting more and more German visitors. The Curonian Spit, a narrow headland declared a UNESCO World Heritage Site in 2000, lies partly in the Kaliningrad Oblast and partly in Lithuania.
In terms of internal Russian tourism, the seaside resorts of the Black Sea coast as well as a number of North Caucasian thermal spring resorts such as Kislovodsk or Pyatigorsk are important. 400 kilometers lie between the northernmost and southernmost points of the Russian Black Sea coast. On this relatively small stretch of coast, located on the same latitude as the seaside resorts of the Adriatic Sea and the Italian and French Mediterranean coasts, the majority of Russia's seaside resort activity is concentrated within the season from May to October.
Ski tourism is becoming increasingly popular in the North Caucasus. Especially for the 2014 Winter Olympics in Sochi, the corresponding infrastructure was expanded.
Transport infrastructure
With a size of 17,075,400 km², the country's special focus is on having the most diversified and functioning infrastructure possible. After Russia's political transition, the volume of traffic had initially decreased for the most part due to economic downsizing, but then experienced strong growth. Much of the current infrastructure still dates from Soviet times and is now in need of modernization, and the existing transportation systems generate little network effect. The expansion and modernization of the transportation infrastructure is therefore a high priority for the Russian government. In 2005, the government adopted a strategy for the renewal of transport routes, focusing on continued modernization and improvements in rail, road and air transport, as well as the rehabilitation of the country's ports. In addition, concessions and other public-private partnership models in the transport sector are to be stepped up in order to mobilize financing from private investors in this sector as well.
Despite difficult conditions, Russia programmatically wants to establish itself as an important hub in Asia-Europe traffic and to some extent also on the north-south axis from northern Europe to India. To this end, the logistics infrastructure is to be expanded, especially at the Moscow and St. Petersburg hubs.
While Russia's transport infrastructure west of the Urals is generally well developed, the infrastructure of road and railroads in the Trans-Ural and Siberia is technically obsolete at best and not competitive. The biggest transportation obstacle to linking the vast territories of Siberia economically to the booming South and Southeast Asian states is the lack of transport routes in the north-south direction. Accordingly, Vladimir Putin and Xi Jinping agreed in 2015 to integrate the Eurasian Economic Union, initiated respectively by Russia and China, and the Silk Road Belt Initiative into one project, the Central Eurasia Initiative. The aim is to develop a logistical strategy for a new transport framework for Siberia and Russia's Far East.
In the Logistics Performance Index, which is compiled by the World Bank and measures the quality of infrastructure, Russia ranked 75th among 160 countries in 2018.
Railroad
As a means of mass transportation over long distances, the railroad occupies an important part of the transport market in Russia. Due to the long distances, the connection of the Far East was a great challenge in the early 20th century, which the country was able to establish with the famous Trans-Siberian Railway. In parallel, at the end of the 20th century, in order to open up the Far East of Siberia, the Baikal-Amur Highway was built from Lake Baikal to the Amur River. These two and the branching routes open up the country in a west-east direction. They will make it possible, for example, to reduce the transport of goods between Pusan and Helsinki from about 47 days by sea to about 16 days.
In May 2001, the Russian government decided to implement the railroad reform. The main objectives were the liberalization of the railroad market and the liberalization of railroad tariffs. As part of the railroad reform, the former Ministry of Railways (MPS) was dissolved in October 2003 and Russia's second largest state-owned company, Rossiyskiye schelesnyje dorogi (RZhD), was established. In recent years, Russia has also seen the emergence of 85 private rail companies, which now transport more than 25 percent of freight and own about 30 percent (about 200,000 freight cars) of the total freight car fleet in Russia. The rail network in Russia is operated by RZhD. In total, the well-developed rail network (broad gauge with 1520 millimeters) covers about 87,000 kilometers, of which just under half (40,000 kilometers) is electrified. On Sakhalin Island, there are almost 1,000 kilometers in 1067 millimeter gauge. In addition, there are 30,000 kilometers of non-public industrial railroads (all figures 2004). Whereas in Western Europe road haulage has been the dominant mode of transport for decades and rail has been of secondary importance, trucks have only been able to catch up in Russia since 2000. As a result, rail has an above-average market share of 83 percent of freight traffic in Russia.
Road traffic
Since 2000, there has been a clear trend toward roads in Russia. Road density is very low at 40 meters of road per square kilometer. This is partly due to the very low population density in large parts of the country. The road network in Russia is of very variable quality, and its expansion cannot keep pace with the ever-increasing road traffic. The density of the network decreases sharply from west to east: the further east one moves from Moscow, the more road conditions deteriorate. Nevertheless, the majority of freight traffic between Western Europe and Russia is carried by road - in transit via Poland and Belarus or via the northern route via Poland and the Baltic republics as well as via Finland. The difference in the gauge of the railroads also contributes to this.
The Russian highway and trunk road network comprises a total of about 540,000 kilometers (2001), two-thirds of which are paved. Only since 2003 has there been a spatially and seasonally continuous road connection from the Baltic Sea to the Pacific Ocean. Outside of urban areas, the trunk roads are generally not developed as highways or expressways, and even on larger wide roads, the directional lanes are not separated by guardrails. The most important trunk road in Russia is the European Road 30, which ends in Siberia.
The share of transport costs in production costs is up to 20 percent due to the poor roads. The poor infrastructure costs the country up to nine percent of its economic output; transport experts estimate that the equivalent of at least 32 billion euros would have to be invested annually in expanding the roads.
A relatively large number of fatal accidents occur on the roads. In 2013, there were a total of 18.9 traffic fatalities per 100,000 inhabitants in Russia. By comparison, in Germany there were 4.3 fatalities in the same year. This means that a total of 27,000 people lost their lives in road traffic. The country's motorization rate is in the upper middle range worldwide. In 2017, there were 324 motor vehicles per 1000 inhabitants in the country. With around 46.9 million vehicles, Russia has the fifth-largest vehicle fleet of any country.
Shipping
Russia has a considerable number of ports and navigable waterways. 72,000 kilometers of inland waterways in the European part of Russia connect the Baltic Sea, the Black Sea, the inland lakes and the White Sea. Important waterways in this regard are the Volga, the Kama, the Nizhny Novgorod Oka, the Vyatka, the Don and the canals connecting these rivers.
In Siberia, 24,000 kilometers are navigable. Due to the drainage of the major rivers Ob, Yenisei and Lena into the Polar Sea, there is no east-west access by water; due to ice formation, the polar route is only possible for a few months in summer, but this period is being extended by climate change. The navigability of rivers and canals is severely impaired by meteorological influences (water level) and inadequate development. Since 1990, a reduction in the number of inland waterway vessels has been observed in Russia. In 2002, the number of inland vessels was still about 8800, of which 8000 were cargo vessels and 800 passenger vessels. The most important Russian inland ports are Arkhangelsk, Perm, Yaroslav, Saratov and Cheboksary.
Maritime shipping is one of the fast-growing transport sectors in Russia. The main reason for this is the increasing export volume of crude oil and petroleum products. The most important seaports are located in St. Petersburg and Kaliningrad on the Baltic Sea, Novorossiysk and Sochi on the Black Sea, and Vladivostok, Nakhodka, Magadan and Petropavlovsk-Kamchatsky on the Pacific Ocean; Murmansk is the only (North) Atlantic port kept ice-free all year round. In 2003, cargo throughput in Russian ports amounted to 285.7 million tons. Ferry traffic is important for freight traffic between the Russian heartland and the exclave of Kaliningrad.
Aviation
In Russia and the Soviet Union, aviation was of great importance from an early stage due to the country's surface area. National air traffic connects remote areas that were never worth reaching by land. In the Soviet era, the state-owned Aeroflot was the largest airline in the world and its fares were sometimes cheaper than those of the railroads. Tickets to Russia's Far East are still subsidized by the state today. In addition to the still semi-state-owned Aeroflot, the larger airlines are Rossiya, S7 Airlines and UTair, which are also affiliated with the state. The number of airports in Russia decreased from 1302 to 496 between 1992 and 2011, with the number of international airports increasing from 19 to 70 and 55 airfields having a paved runway longer than 3,000 meters. Several international airlines fly to other Russian cities besides Moscow. The largest and most important airports are Sheremetyevo-2 and Domodedovo near Moscow. In 2011, Russia's aircraft fleet comprised about 6000 aircraft, of which nearly 2000 were cargo planes. Government support and regulations serve to stimulate Russia's aviation industry. In the fall of 2018, the government awarded banks Sberbank and VTB a contract to establish a major regional airline, With their help, the upgrade of regional airports should be achieved to relieve the Moscow hub. In January 2020, President Putin instructed the government to form a company to develop the remote eastern regions with a fleet consisting entirely of Russian aircraft. This company was created on the basis of Red Wings.
Public transport
Almost half of passenger transportation is by local transport, mainly via the bus network, which exists in 120 cities. In addition, 90 Russian cities have a trolleybus network, 66 cities have streetcars and suburban trains, and seven cities also have a subway and four others have commuter rail lines.
In the 1990s, many of the good local transport networks fell into disrepair and were increasingly supplemented or replaced by private bus or regular taxi services. Also more recently, streetcar or trolleybus systems in several major cities have been decommissioned in favor of buses (for example, the trolleybus in Arkhangelsk and the streetcar in Ivanovo in 2008, or the streetcar in Voronezh in 2009).
Aerospace
In the 1990s, Russian spaceflight suffered from major funding problems, so that many programs came to a standstill. With the improvement of the economic situation, Russian spaceflight has been able to recover. Roskosmos, the state-owned enterprise, is the national space agency responsible for the country's civil space program; its headquarters are in Star City near Moscow. It was established as an agency in 1992 and took over the essential resources of the Soviet space program. Roskosmos currently uses three spaceports: the Plessezk Cosmodrome near Arkhangelsk, the Vostochny Cosmodrome in the Amur region, and the Baikonur Cosmodrome in Kazakhstan, the main base for Soviet and Russian spaceflight. Russia has been one of the most successful providers of commercial rocket launches for decades.
In July 2005, a new space program for the years 2005 to 2015 was approved by the Russian government. The goal was to secure the world level of Russian spaceflight and consolidate Russia's position among the world's leading space powers. Priority was given to the development and exploitation of space technology and services and the construction of spacecraft for manned flights, transportation and interplanetary missions, including a reusable space system. Russia is a major participant in the ISS, which, since the cancellation of the space shuttle program, has increasingly used the Soyuz rocket with the Soyuz spacecraft and the Progress space transporter to supply it.
Furthermore, the scientific and technical basis for a manned flight to Mars and a new-generation space station is to be created. As a first step, Russia wanted to bring its satellite fleet up to world standards by 2015, primarily with the help of Western elements. In addition, the first unmanned launches with modernized versions of the previous launch vehicles were to take place from the new Vostochny cosmodrome in the Amur region at that time. In fact, the older Soyuz-2.1 model has been launching there since 2016, and the first manned launches of spacecraft with the new Angara A5 launch vehicle were planned for 2020 from Vostochny; this is postponed until the mid-2020s. At the same time, missions for in-depth exploration of the moon as well as the planet Venus are planned for the 2020s.
The Russian space industry had been intertwined with that of Ukraine since Soviet times; several rockets, such as the Dnepr and the Zenit, were jointly developed and produced. The war with Ukraine broke up this cooperation, causing Russia to lose about half of its selection of launch vehicles. New indigenous developments such as the Soyuz-5 and -6 are expected to compensate for this during the 2020s.
Communication infrastructure
The history of the Internet in Russia begins in September 1990, when the top-level domain ".su" was registered for the then Soviet Union. This domain is partly used by Russian websites until today. In March 1994, the official top-level domain ".ru" was registered for Russian Internet addresses. Websites under this domain make up a considerable part of the Russian Internet - often called Runet for short. Meanwhile, the country also has a Cyrillic top-level domain (.рф). The Russian Internet segment ranked fourth worldwide around 2012, with a total of more than 3.6 million domain names.
In the 2000s, the number of Internet users rose steadily throughout Russia: While in 2000 there were only 3.1 million users (2.1 percent of the population) nationwide, by 2007 their number was already 28 million (19.5 percent). With more than 50 million Internet users, Russia became the European leader in 2011. In 2016, 102 million Russians used the Internet, or 71.3 percent of the population. Runet's most significant Internet projects include the search engines Rambler and Yandex, the online network W Kontakte, and the information and news portals RBC Informations Systems, Lenta.ru, and Gazeta.ru. The best-known providers include major telecommunications companies such as CenterTelekom, MGTS, North-West Telecom and VolgaTelekom. In the wake of government support for Internet expansion, social media activities in Russia experienced an exceptionally strong upswing, and corresponding platforms play a significant role in Russia. The Russian platforms Vkontakte.ru and Odnoklassniki.ru are particularly popular, with higher growth rates than international platforms such as Facebook. LiveJournal was also used more than average in Russia by international standards and, finally, Russian. The gross reach of social networks in 2010 was 49.2 million people living in Russia. Since then, many regulations with vague wording have been enacted, allowing authorities to crack down on services and users. From 2018, all communication content would have to be stored (and made available to the state); a postponement of this obligation by 5 years had to be considered in 2017 due to the effort involved.
Most of Russia's postal services are handled by the state-owned company Potschta Rossii. This was spun off in 2002 from the Federal Ministry of Posts and Telecommunications, which was also responsible for postal traffic in Soviet times. Today, Pochta Rossii offers its services in a total of over 42,000 post offices, which are distributed throughout Russia. The number of employees in the company is around 415,000 across Russia. Since the beginning of the 21st century, post offices in many cities have been offering not only basic postal services - such as sending and receiving letters, parcels and telegrams, and postal giro - but also complementary services, including public computer workstations with Internet access.
In the mail delivery sector, Potschta Rossii is the monopolist in Russia. In the parcel mail sector, internationally active courier companies such as DHL and TNT Express have also been operating in Russia since the 1990s.
The all-Russian telecommunications company Rostelekom is the largest company in this sector in Russia. Since April 1, 2011, it has included the regional branches Dalny Vostok (Far East), Sibir, Ural, Volga, Yug (South), Severo-Sapad (North-West) and Central (Center). The mobile communications market is mainly shared by the country's three largest providers Mobile TeleSystems, Beeline and MegaFon, as well as a number of smaller regional providers. This sector experienced rapid growth in Russia from 2000 onward: While less than one percent of the Russian population owned a cell phone in 2000, the nationwide number of cell phones exceeded the population figure in 2006 and amounted to a good 155 million as of March 31, 2007.
In 2019, the law stipulated that Internet data traffic must be routed via the company's own servers, thus ensuring independence from foreign countries from now on.