Country Trade Risk Index (ERI): 93.57
Country risk reference rating: 5 (5/9)
Country Risk Outlook: Negative
Economic and trade risks
In 2012, Russia’s nominal GDP was US$2.0 trillion, per capita GDP was US$14,113, and the real economic growth rate was 3.4%. The total foreign trade volume was US$864.9 billion. Agriculture accounts for 4% of GDP, industry accounts for 37% of GDP, and the service industry accounts for 59% of GDP. The main industrial industries are energy, military industry, mining, chemicals, steel, machinery, and textiles. Proven natural gas reserves are 48.37 trillion cubic meters, accounting for 27.2% of the world’s proven reserves, ranking first in the world.
Russia is basically politically stable, rich in oil and gas resources, and its moderate economic growth rate is expected to continue; the investment environment is unlikely to improve significantly in the short term, and relations between China and Russia will further develop. In the future, Russia’s national risk level will be stable .
Bilateral economy and trade
Sino-Russian trade is highly complementary. China’s border trade exports to Russia are mainly light textiles, agricultural products, and small household appliances; its imports are mainly primary products such as logs, crude oil, fertilizers, steel, and pulp. In 2012, bilateral trade slowed down, but the trade volume between the two countries still reached a record high of US$88.16 billion, an increase of 11.2%. China has become Russia’s third largest trading partner for three consecutive years. Since 2013, the trade volume between China and Russia has declined slightly compared with the same period in 2012, with a decrease of 1.2% in the first half of the year, but this was mainly affected by the decline in international commodity prices. Sino-Russian investment cooperation is in the ascendant, especially China’s investment in Russia is growing rapidly. However, problems such as irregular trade order, backward financial system construction, high tariffs, trade remedy frictions, gray customs clearance, and labor frictions have adversely affected Sino-Russian economic and trade. With Russia’s accession to the WTO and the gradual reduction of tariffs, Sino-Russian economic and trade relations will further develop.
Business environment
Russia is rich in resources and its economic recovery after the financial crisis has exceeded that of most developed countries. The Russian people have a high level of education and the scientific research team has great potential. Russia’s existing industrial technology is backward and its equipment is outdated, but this also means that there is a large demand for infrastructure construction and there are many industrial transformation and new construction projects. However, Russian regulations are cumbersome, the transparency and standardization of law enforcement are low, the bureaucracy is serious, the efficiency of public services is low, there is a lack of skilled technical workers, and self-developed industry standards are different from international standards, which increases the burden on investors.
From a policy perspective, in order to attract more foreign investment, the Russian government has proposed a “modernization” strategy and the privatization of state-owned assets, and has revised relevant laws and regulations, simplified foreign investment procedures, lowered the entry threshold for foreign investment and established “direct investment” Fund” and other measures have shown a recovering trend in attracting foreign investment.
Overall evaluation
Russia’s political and security situation is generally stable. Since the financial crisis, Russia’s economy has recovered rapidly, but its economic growth has slowed down since 2012, and its exports have shown a decelerating trend due to the decline in global renewals. Russia has sufficient international reserves and controllable external debt risks. Although its current account surplus has declined, it will still remain positive and its external liquidity situation is good. Russia’s business environment is poor and there are many restrictions on foreign investment industries. However, the investment environment has been continuously improving in recent years. After joining the WTO, the market opening has opened up new business opportunities for foreign investors. Legislative work is progressing quickly. The current mutual investment scale of Sino-Russian trade is relatively small, but it will have great development potential in upgrading the trade structure and increasing investment in the future.
Based on the analysis and assessment of the current overall situation, Russia’s country trade risk index (ERI) is 93.57, the country risk reference rating is 5 (5/9), the country risk level is medium to high, and the country risk outlook is negative .