Russia is already the world’s largest country in terms of territory, with a consumer market of over 140 million people, vast natural resources, a highly educated workforce, and technologically advanced research and production capabilities. However, the Russian market’s real potential is through its unified economic space which is emerging in the form of a new customs union and the formation of the Eurasian Economic Community (EAEC). The EAEC originates from the Common Wealth of Independent States (CIS), a loose organization which replaced the USSR. However, Russia has focused on transforming this space into a unified economic block as seen recently by Belarus and Kazakhstan which are entering a single customs union with the Russian Federation.
Consumer activity in this region has contributed to dynamic growth in trade, retail, telecommunications and services on the back of rising incomes and the development of consumer lending, Russia is transforming the region into a single economic space:
- Russia and its neighbors from the post-Soviet space combined, has over 260 million people, whose incomes are increasing every year. Currently 207 million consumers reside within the EAEC and Ukraine has recently expressed interest in joining the customs union with Russia, Kazakhstan and Belarus which will add another 50 million consumers.
- Free Trade accord between Serbia and Russia allows Serbia to become a bridge to Russian/Eurasian markets and expands the Russian market into Southeast Europe.
- High consumption, spending will and capability throughout the region.
- Large untapped potential, not only in Russia but also in resource rich Kazakhstan offer even more potential.
- Russia has become the largest automotive sales market in Europe as of 1H 2008 sales results (PricewaterhouseCoopers study). Combine this with large markets in Ukraine will make this region one of the most important automotive and truck sales market globally.
Even without factoring the performance of the entire region, Russia itself promises growth. According to the Moscow-based brokerage Aton LLC report to Bloomberg, Russia’s domestic product may expand 6.4 percent, more than the previous forecast of 5.8 percent.
According to PricewaterhouseCoopers, Russia could become the largest European economy in two decades; soon leading economically ahead of Germany and France. However, Russia’s ability to economically integrate the Eurasian space will be of greater interest in projecting how well this market will prosper in the coming decades.
Tags: BRIC, CIS, emerging markets, Export to Russia, Investing in CIS, investing in russia, russia, Russian, Serbian, ukraine
