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Russia: country overview

04 September 2012
by Ina Dimireva -- last modified 30 January 2017

Russia is the EU's biggest neighbour and third biggest trading partner, with Russian supplies of oil and gas making up a large percentage of its exports to Europe. The current legal basis for EU-Russia relations is the Partnership and Cooperation Agreement (PCA) which came into force in 1997, initially for 10 years.


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Member of Schengen area: No

Political system: Republic

Capital city: Moscow

Total area:  17 075 200 kmĀ²

Population:140 million

Currency: Russian rouble

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Economy overview

Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy towards a more market-based system. Both economic growth and reform have stalled in recent years, however, and Russia remains a predominantly statist economy with a high concentration of wealth in officials' hands. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy, transportation, banking, and defense-related sectors. The protection of property rights is still weak, and the state continues to interfere in the free operation of the private sector.

Russia is one of the world's leading producers of oil and natural gas, and is also a top exporter of metals such as steel and primary aluminum. Russia's reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices.

The economy, which had averaged 7% growth during 1998-2008 as oil prices rose rapidly, has seen diminishing growth rates since then due to the exhaustion of Russia's commodity-based growth model.

A combination of falling oil prices, international sanctions, and structural limitations pushed Russia into a deep recession in 2015, with the GDP falling by close to 4%. Most economists expect this downturn will continue through 2016. Government support for import substitution has increased recently in an effort to diversify the economy away from extractive industries. Although the Russian Ministry of Economic Development is forecasting a modest growth of 0.7% for 2016 as a whole, the Central Bank of Russia (CBR) is more pessimistic and expects the recovery to begin later in the year and a decline of 0.5% to 1.0% for the full year. Russia is heavily dependent on the movement of world commodity prices and the CBR estimates that if oil prices remain below $40 per barrel beyond 2016, the resulting shock would cause GDP to fall by up to 5%.

Useful links

Delegation of the EU to Russia

Government of the Russian Federation

Tourist information

Source: Europa, The World Factbook

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