The Russian economy has undergone massive changes since the fall of the Soviet Empire, transitioning from a state controlled, socialist structure to a more market-based and globally integrated economy. Economic reforms in the 1990s privatized most industries, and some energy and defense related sectors. The Russian economy has averaged 7% growth since the 1998 crisis, resulting in the emergence of its middle class. But Russia’s heavy reliance on commodity exports made the country vulnerable during the global economic crisis of 2008, though recovery signs were evident in 2010. This was due to the rising oil and commodity prices, and the government’s $200 billion rescue package to increase liquidity in the banking sector.
The global economic crisis hit Russia hard, which caused a crisis in its stock market. As the financial crisis gathered steam in the fall of 2008, the accompanying steep fall in global demand, commodity prices, and tightening of credit served to almost grind Russia’s economic growth to a halt in the fourth quarter of 2008, to 1.1% down from 9.5% during the same period in 2007. By late 2009, however, the Russian economy had begun a modest recovery, bolstered by the government's anti-crisis policies, the global rebound, and the nearly 50% rise in oil prices over the course of the year. Russia’s leaders put renewed emphasis on promoting innovation as key to economic modernization as well as on the need to diversify the economy away from oil and gas.
Russia is one of the most industrialized of the former Soviet republics. However, years of low investment have left much of Russian industry antiquated and highly inefficient. Besides its resource-based industries, it has developed large manufacturing capacities, notably in metals, food products, and transport equipment. Russia is now the world's third-largest exporter of steel and primary aluminum. Russia inherited most of the defense industrial base of the Soviet Union, so armaments remain an important export category for Russia.