Since the collapse of the Soviet Union in 1991, the Russian Federation has implemented an array of economic reforms that transformed the country from a centrally planned economy to a market-based economy. With a population of over 144 million and a GDP per-capita of $24,026, Russia is a significant actor in the global economy (World Bank, 2017). As a resource-rich country, Russia is one of the world’s largest exporters of oil and gas and a top producer of metals such as steel and aluminum (CIA World Factbook, 2017).
However, heavy reliance on commodity exposes Russia’s economy to the boom and bust cycles of the commodity price, such as the fall of global oil price in 2014. Geopolitics also substantially affects Russia’s economic performance. For example, Russia’s military intervention in Ukraine led to an economic sanction imposed by the United States (Freedom House, 2017). Political and economic reforms spearheaded in the 1990s stalled in recent years (CIA World Factbook, 2017). As a result, several key economic problems remain: high concentration of wealth in the hands of government officials, rampant corruption, and continuous government meddling in the private sector (CIA World Factbook, 2017).
However, the recovering global economy, firming oil price, and growing macroeconomic stability have all led to an uptick in Russia’s economy (World Bank). Thus, the Russian government signaled its plan for fiscal consolidation that would manage the impact of external factors on the budget and real exchange rate (World Bank). It is apparent that there is a substantial level of uncertainties in the Russian economy and we have yet to see Moscow to move gradually from its overreliance on oil, weed out corruption, and improve its global diplomacy.