Russia Political & Economic Risk Analysis

Modest growth amid solid economic fundamentals

C3

SENSITIVE RISK for entreprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

The country risk assessments are your North Star metrics to make the right decision for your business and understand the risks in international trade. We have always the best solution for your needs

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GDP USD1,658bn (World ranking 11, World Bank 2018)
Population 144mn (World ranking 9, World Bank 2018)
Form of state Federation
Head of government Vladimir Vladimirovich PUTIN (President)
Next elections 2021, legislative
  • Abundant natural resources, in particular oil and gas
  • 21 years of continued current account surpluses (including the crisis years 2009 and 2015-2016)
  • Low public debt
  • Comfortable foreign exchange reserves
  • Far-reaching structural reforms still outstanding
  • High vulnerability to global oil price shocks
  • Prone to capital flight
  • Exchange rate remains vulnerable to volatility and sudden depreciation
  • Prolonged recession has adversely affected corporate profitability
  • Poor rule of law and high level of perceived corruption
  • Geopolitical risks: Conflict with Ukraine and serious dispute with the West over that conflict (including sanctions and counter-sanctions). Also involved in Syria crisis

Trade structure by destination/origin

(% of total)

Exports Rank Imports
China 9%
1
22% China
Germany 8%
2
12% Germany
Turkey 5%
3
5% Belarus
Belarus 4%
4
4% Italy
United States 4%
5
4% France

Trade structure by product

(% of total)

Exports Rank Imports
Petroleum, petroleum products and related materials 48%
1
10% Road vehicles
Iron and steel 7%
2
7% Other industrial machinery and parts
Non-ferrous metals 5%
3
6% Articles of apparel & clothing accessories
Coal, coke and briquettes 4%
4
6% Electrical machinery, apparatus and appliances, n.e.s.
Fertilizers other than group 272 3%
5
5% Medicinal and pharmaceutical products
The payment behavior of domestic firms is often poor and the businesses themselves have complex legal structures. Payment terms are not fully regulated and Russian counterparties try to renegotiate conditions, requesting postponement of payments or ignoring contractual obligations.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

Courts can be fairly efficient when a debt is certain and undisputed, but legal proceedings may otherwise be complex (no default judgments, no fast track proceedings above EUR 4,000 even if the debt is certain and undisputed) and cannot be avoided through Alternative Dispute Resolution methods(which is not relied upon) or through foreign courts (since Russian courts apply extremely strict jurisdictional exclusivity rules).

Insolvency proceedings ought to be avoided. A debt renegotiation mechanism isindeed available, although it is unused in practice. Liquidation is therefore the default procedure, but unsecured creditors would have very limited chances of recovering their debt.

Euler Hermes

Economic Research Team

research@eulerhermes.com

Manfred Stamer

Senior Economist for Emerging Europe and the Middle East

manfred.stamer@eulerhermes.com

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