From 1997 to 2007, Russia maintained an annual Gross Domestic Product (GDP) growth average of 7% but during the 2009 financial crisis, its economy contracted by a sharp 7.9 per cent. In 2010, GDP grew by 3.4%, boosted by gains in oil and energy prices.
For a long time, Russia has faced challenges dealing with its high unemployment and poverty rates. However, with an improvement in its foreign currency reserves and international finances, Russia has been able to achieve some economic stabilization.
According to the World Bank, Russia’s GDP is expected to grow by 4.4% in 2011, despite higher than expected oil prices. In the same report, the World Bank identifies challenges in domestic demand and credit activities which leaves private consumption as the main engine of growth.
In April, Russian deputy Economic Development Minister Andrei Klepach announced the approved social and economic development forecast for 2012 – 2014. According to Klepach, Russia’s 2012 GDP is expected at 3.5% and is projected to reach 4.2% – 4.6% in the following years.
In the long run, as Russia closes its output gap, the pace of economy is likely to slow. However, with the right structural policies aimed at higher productivity, innovation and competition, Russia can achieve an even higher long-term growth and standard of living for its people.
Indexed against year 2000 prices, the Russian inflation rate is currently the 15th highest rate in the world.