Russia’s economy is a mixed high-income economy where the state has strategic sectors in the economy. Under the Soviet system, it was the agencies of the central government that were planning on everything related to the country’s economy. The government owned and controlled all the factories and farms. Private businesses were banned, and Russia turned from an agricultural state to an industrial giant. Heavy industries witnessed the rapid development of chemicals, construction, machinery and steel. After the collapse of the Soviet Union, the economic situation deteriorated. The government turned its currency into a currency that facilitated the exchange of foreign currency in the world’s financial markets. The economy moved from a central to a market economy between 1991-1998.
The Russian economy depends primarily on energy revenues in economic growth, where Russia occupies, “according to figures released by the American Institute of Energy”:
- The world’s first producer of crude oil by producing 10.5 million barrels per day.
- Eighth in the world with oil reserves by 80 billion barrels at the beginning of 2017.
- The world’s second largest natural gas production by 630 billion cubic meters annually
- The second in the world with reserves of natural gas by 47 trillion cubic meters.
- Third in the world with coal reserves.
Russia is the second country after the United States in energy production. It supplies the energy used locally from several sources – oil and coal – 68% from the energy produced, while 12% from the hydroelectric power stations and 13% from the nuclear reactors.
Mining is the second most important strategic product of the Russian government, where Russia is rich in mineral resources, where iron reserves exceed 45 billion tons. Russian iron and steel production is estimated at 400-350 million tons annually. Russia occupies the first place with nickel production. Bauxite – the raw material of aluminum, manganese, platinum, radium, gold, lead, tin, zinc, copper and silver.
Russia possesses a large and sophisticated weapon industry that is capable of designing and manufacturing high-tech military equipment and includes third-generation air force. Russia accounts for 22% of the world’s arms market sales.
In agriculture, Russia ranks second after US in wheat sales. Despite the existence of large tracts of land, agriculture suffers from many problems, including:
- short growth season.
- The lack of fertile land
- The system of state farms is characterized by inefficiency and waste.
Russia receiving 31 million tourists every year. Now, as everyone knows, Russia is hosting the World Cup, which will certainly support the tourism sector in the country, which covers 17 million square kilometers of land.
In recent years, the Russian economy has been disrupted by the fall in oil prices and the European and American sanctions imposed on Russia in 2014 against the background of the situation in Ukraine. The ruble fell from 32 rubles to the dollar to 70 rubles against the dollar, forcing the government to intervene to save the currency. The central bank had to raise the interest rate from 8 basis points to 17 basis points before gradually cutting it to 7.25 basis points. As a result, wages were reduced by 10%. There was an economic contraction at the beginning of 2015 and the contraction rate reached 4.1% in the last quarter of 2015. Slowly, economic growth began to improve, but it exceeded the recession by the beginning of 2017. Now growth in Russia accounts for 1.3% of GDP.
With oil prices rising above the $ 70 barrier, which the Russian government considers appropriate for the government’s general budget.
In a special World Bank report on the situation in Russia, economic growth began in the second half of 2016 and is expected to reach 1.8 percent of GDP in 2018 and 2019. The World Bank confirms that raw material production, military spending and the public transport sector are the basis In gross domestic product, contrary to what the Russian Prime Minister confirmed the decline of the dependence of the Russian economy on the dollar and that almost 60% of the oil and gas trade, but from other sources.