Russia has been regarded as one of the world’s strongest emerging economies together with Brazil, India, China and South Africa, popularly referred to as the BRICS countries. According to a recent Financial Times analysis we might soon refer to the BICS countries without mentioning Russia.
The analysis paints a grim picture of times to come in Russia. In the early 2000s, Russia learnt how to increase exploitation of its natural resources. The result was an annual average GDP growth rate at 7,9 percent from 2000 to 2008 according to the World Bank.
The financial turmoil in 2009 hit Russia hard and resulted in a negative GDP growth at 7,8 percent. Over the recent years we have seen annual growth rates at about 4,5 percent.
In April this year, the Russian Ministry for Economic Development slashed the country’s GDP growth forecast for 2013 from 3.6 percent to 2.4 percent, according to RIA Novosti. The Ministry also cut the forecast performance indicators for industrial production and investment.
The European Bank for Reconstruction and Development (EBRD) is even more pessimistic and issued a GDP growth forecast for Russia in 2013 at 1.8 percent.
It has long been argued that growth in foreign direct investment in Russia has been elusive due to the deficient investment framework in Russia. EBRD argues that growth can only be achieved by real measures to improve the investment climate, making it more predictable and transparent for both domestic and foreign investors.