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According to the data of the Institute of World Economy and International Relations (IMEMO) of the Russian Academy of Sciences, in 1999-2005 Russia's GDP increased by nearly 57%, with average annual growth rates constituting 6.6%. The preliminary figure of Russia's GDP growth in 2005 cited by the Federal State Statistics Service (Rosstat) was 6.4%.
Overall, Russia's industrial output increased by 4% in 2005. At the same time, industrial growth declined year-on-year, primarily because of a slowdown in the fuel and energy sector, mostly in oil and gas production. Agricultural output increased by 2% in the same period, mostly due to a rise in grain yield (83.9 million tonnes), the production of technical crops, and poultry farming.
Year-on-Year Growth of Russia's Key Economic and Social Indicators
2005-2004
Gross domestic product 106.4 107.2
Index of industrial production 104 108.3
Agricultural output 102 103.1
Communications services 115.7 129
Retail trade 112 112.5
Foreign trade, 132.6 132
including:
exports 134.6 134.4
imports 128.9 127.5
Investment in fixed assets (estimate) 110.5 110.9
Source: Federal State Statistics Service
In 2005, the value of Russian exports exceeded $240 billion and that of imports $120 billion, registering a 35% and 29% increase respectively. Energy resources, ferrous and non-ferrous metals, fertilisers and timber continued to dominate Russian exports.
The investment climate in Russia is gradually improving, with more and more foreign companies emerging on the Russian market. According to the AT Kearney's data, Russia rose to the sixth place in the FDI Confidence Index 2005, after China, the United States, Britain, India and Poland (in March 2005, it was given eleventh place in the FDI Index).
According to the data of the Russian Economic Development and Trade Ministry, foreign investment into the Russian economy amounted to $26.8 billion in 2005. By late 2005, accumulated investment totalled $96 billion. The manufacturing industry received the largest portion of the investment funds (26.6%) and was followed by mineral extraction (21.5%). Foreign investment into wholesale and retail trade also registered an increase.
The Russian stock market was also growing in 2005: the RTS Index rose nearly twofold - from 614 to the new historical record of 1125 points. Russia's positions on the IPO global market are growing stronger. Initial public offerings of national companies' shares helped them attract about $6 billion last year alone (against $700 million in 2004). Quite a few companies intend to follow their example next year and among them are state-owned Rosneft and Vneshtorgbank.
The inflation problem was also in the focus of attention last year. Statistics service data show that inflation dropped from 11.7% in 2004 to 10.9% in 2005. However, the inflation target for 2005 (8.5%) was not met. Yevgeny Primakov, head of the Chamber of Commerce and Industry, explained the failure to tangibly reduce inflation in 2005 by corporate price formation at the level of natural, sectoral and local monopolies. The price rise will continue to outpace inflation growth if the state fails to take appropriate economic measures and create mechanisms capable of putting an end to monopoly price formation.
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