Russian Federation | Nation of Braveness

The economic crisis that struck all post-Soviet countries in the 1990s was nearly twice as intense as the Great Depression in the countries of Western Europe and the United States in the 1930s. Even before the financial crisis of 1998, Russia's GDP was half of what it had been in the early 1990s. Since the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have bolstered economic growth in Russia.

The country ended 2007 with its ninth straight year of growth, averaging 7% annually since 1998. In 2007, Russia's GDP was $2.076 trillion (est. PPP), the 6th largest in the world, with GDP growing 8.1% from the previous year. Growth was primarily driven by non-traded services and goods for the domestic market, as opposed to oil or mineral extraction and exports.

The average salary in Russia was $640 per month in early 2008, up from $80 in 2000. Approximately 14% of Russians lived below the national poverty line in 2007, significantly down from 40% in 1998 at the worst of the post-Soviet collapse.Unemployment in Russia was at 6% in 2007, down from about 12.4% in 1999.

A Rosneft petrol station. Russia is the world's leading natural gas exporter and the second leading oil exporter.

Oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad.Since 2003, however, exports of natural resources started decreasing in economic importance as the internal market strengthened considerably. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia's GDP and the government predicts this will drop to 3.7% by 2011. Russia is also considered well ahead of most other resource-rich countries in its economic development, with a long tradition of education, science, and industry. The country has more higher education graduates than any other country in Europe.

The main office of the Bank of Russia.

A simpler, more streamlined tax code adopted in 2001 reduced the tax burden on people, and dramatically increased state revenue. Russia has a flat personal income tax rate of 13 percent. This ranks it as the country with the second most attractive personal tax system for single managers in the world after the United Arab Emirates.

The federal budget has run surpluses since 2001 and ended 2007 with a surplus of 6% of GDP. Over the past several years, Russia has used oil revenues from its Stabilization Fund of the Russian Federation to prepay most of its formerly massive debts, leaving it with one of the lowest foreign debts among major economies. Oil export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to $597.3 billion on 1 August 2008, the third largest reserves in the world.

The economic development of the country though has been uneven geographically with the Moscow region contributing a disproportionately high amount of the country's GDP. Much of Russia, especially indigenous and rural communities in Siberia, lags significantly behind. Nevertheless, the middle class has grown from just 8 million persons in 2000 to 55 million persons in 2006. Over the last five years, fixed capital investments have averaged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year.

Despite the country's strong economic performance since 1999, however, the World Bank lists several challenges facing the Russian economy including its diversification, encouraging the growth of small and medium enterprises, building human capital and improving corporate governance. Another problem is modernisation of infrastructure, ageing and inadequate after years of being neglected; the government has said $1 trillion will be invested in development of infrastructure by 2020.