Embed This Data
- GDP (PPP):
- $2.5 trillion
- 3.4% growth
- 1.8% 5-year compound annual growth
- $17,709 per capita
- Inflation (CPI):
- FDI Inflow:
Russia’s economic freedom score is 51.9, making its economy the 140th freest in the 2014 Index. Its score is 0.8 point higher this year, with improvements in four of the 10 economic freedoms, including control of government spending, counterbalanced by declines in trade freedom, freedom from corruption, and fiscal freedom. Russia is ranked 41st out of 43 countries in the Europe region, and its overall score is below the world average.
Over the 20-year history of the Index, Russia’s economic freedom has been stagnant, with its score improving less than 1 point. Overall, notable improvements in trade freedom and monetary freedom have been largely offset by substantial declines in investment freedom, financial freedom, business freedom, and property rights, and Russia’s economy remains “mostly unfree.”
The foundations for sustainable economic development remain fragile, exacerbated by the poor legal framework. Corruption, endemic throughout the economy, is becoming ever more debilitating. The state maintains an extensive presence in many sectors through state-owned enterprises.
Former President and Prime Minister Vladimir Putin was re-elected president in March 2012 on the heels of hotly disputed December 2011 Duma elections. Political repression is on the rise. Prominent opposition figures have been forced to leave the country, and others have been prosecuted on what appear to be trumped-up charges. Sergey Magnitsky, an anti-corruption crusader and whistleblower, died in jail. The state has reasserted its dominance in the aerospace, mining, and oil and gas industries, and the state budget remains heavily dependent on exports of natural resources, especially hydrocarbons. Russia’s reputation for cronyism and corruption and an inhospitable regulatory environment have damaged its investment climate as well as its emerging small-business community. Russia became a member of the World Trade Organization in August 2012 and is making a bid to join the Organisation for Economic Co-operation and Development.
Corruption in government and business is pervasive, and a growing lack of accountability enables bureaucrats to act with impunity. The leadership frequently announces anticorruption campaigns, but they are typically superficial in nature. The rule of law is not maintained uniformly across the country, and the judiciary is vulnerable to political pressure and inconsistent in applying the law. Protection of private property rights is weak.
The top individual income tax rate is 13 percent, and the top corporate tax rate is 20 percent. Other taxes include a value-added tax (VAT) and an environmental tax. The overall tax burden is 29.5 percent of GDP. Government spending is 36 percent of GDP. Public debt remains modest at just over 10 percent of GDP. Reduced oil and gas revenues have put pressure on public finances.
Bureaucratic obstacles and inconsistent enforcement of regulations continue to inject considerable uncertainty into entrepreneurial decision-making. The outmoded labor code continues to limit employment growth. The government uses extensive subsidies, numerous state-owned companies, export taxes on petroleum products, and other means to influence domestic prices.
Russia’s average tariff rate is 5.2 percent. Russia joined the World Trade Organization in 2012, but some non-tariff barriers such as tariff-rate quotas on agricultural products continue to impede imports. The government screens foreign investment in several sectors of the economy. Large state-owned institutions have increased their domination in the financial sector, outweighing domestic private and foreign banks.