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COPYRIGHT 2006 National Association of Credit Management
The improving Russian economy and rising middle class offer a potentially lucrative market for U.S. exporters of certain products and services. Since the breakup of the former Soviet Union in 1991, Russia has struggled to transform its state-controlled economy to a private, market-driven one. It is working to install a western style legal system and institute major reforms in its banking and other intuitions. Holdover habits and behaviors from the days of Communist totalitarian control pose challenges to exporters that they don't face in Western Europe or some other foreign countries. For these reasons, financial transactions should be made with all due diligence and even caution in Russia.
The CIA's World Factbook notes the economic and political trends in Russia, stating, "While some progress has been made on the economic front, recent years have seen a decentralization of power under (President) Vladimir Putin and the erosion of nascent democratic institutions." The factbook also states, "Other problems include a weak banking system, a poor business climate that discourages both domestic and foreign investors, corruption and widespread lack of trust in institutions." However, despite this gloomy picture, Russia still possesses positive economic potential. It has huge oil and gas reserves, which have allowed Russia to increase its foreign reserves from only $12 billion to some $180 billion at year-end 2005, according to the factbook. Another positive economic fact is that Russia ended 2005 with its seventh straight year of growth, averaging 6.4 percent annually since the financial crisis of 1998. The world factbook also notes, "Since 2000, investment and consumer-driven demand have played a noticeably increasing role. Real fixed capital investments have averaged gains greater...
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