As has been the case with most of the world's economies, the Russian economy has been hit hard by the global financial crisis and resulting recession that became readily apparent in the last quarter of 2008. The crisis brought an abrupt end to about a decade (1999-2008) of impressive Russian economic growth that helped to raise the Russian standard of living and brought economic stability that Russia had not experienced for more than two decades. This success was a major factor in the popular support that former President (now Prime Minister) Putin and the current president, Dmitrij Medvedev enjoyed, and it was also arguably a factor in the boldness with which the Russian leadership reasserted Russia's status as a world power, challenging the United States, Europe, the other former Soviet states, including its military confrontation with Georgia in August 2008. Many European countries and former Soviet states are highly dependent on Russian natural gas. Russia is a significant player on a number of issues critical to the United States, such as nuclear proliferation by Iran and North Korea. Russia's perceived national interests do not always match those of the United States, creating an environment for disagreement if not conflict. While U.S. exports to Russia are still relatively small, Russia is an important market to U.S. exporters of poultry, energy equipment, and technology.. Russia is also an important supplier of a number of raw materials that are critical to U.S. manufacturers. These links have drawn the attention of some Members of Congress. Congress may consider whether to pass legislation to extend permanent normal trade relations (PNTR) status to Russia. During the period, Russia lost close to 30% of its real gross domestic product (GDP), a decline reminiscent of the Great Depression of the 1930s in the United States. However, Russia had also incurred its own foreign obligations since the collapse of the Soviet Union. Russian GDP declined 7.9% in 2009. The trends in overall economic growth are reflected in the standard of living of the average Russian citizen. The issue still remains a challenge for the government. In 2008, oil, natural gas, and other fuels accounted for 68.6% of Russian exports. One indicator of the decline in economic reforms is the measure of the business environment in Russia. However, it is highly likely that Russia's continued dependence on oil and the world price of oil will be a dominant factor in Russia's economic prospects for foreseeable future.
Until recently, the Russian economy was one of the fastest growing economies in the world. The growth brought an improvement in the standard of living of the average Russian citizen and also brought economic stability that Russia had not experienced in at least a decade. This strong economic performance had been a major factor in the popular support that the Russian leadership enjoyed and was also arguably a factor in the boldness with which that leadership reasserted Russia's status as a world power, challenging the United States, Europe, the neighboring former Soviet states in economic and national security areas.
However, as has been the case with most of the world's economies, the Russian economy has been hit hard by the global financial crisis and recession. The crisis brought an abrupt end to the decade's long (1999-2008) economic growth with real gross domestic product (GDP) increasing 6.9% annually on average. Russian GDP then declined 7.9% in 2009 and is expected to increase only modestly in 2010. Other economic indicators showed problems in other parts of the economy.
The high oil prices were a major factor in the economic success Russia enjoyed, especially in the early and middle parts of this decade; however, the collapse of world prices for oil and other commodities in 2008 exposed the downside of Russia's dependence on the production and export of oil, gas, and other natural resources. The failure of Russia to complete important economic reforms and the government's penchant for re-asserting its control over key economic sectors loom among the possible roadblocks to a return to high economic growth rates down the road.
Although its influence has been greatly diminished since the Soviet period, Russia remains a formidable force on the global stage, and its influence seems to be growing. Russia's economy is large enough to influence global economic conditions. Many European countries and former Soviet states are highly dependent on Russian natural gas. Russia is a significant player on a number of issues critical to the United States, for example, nuclear proliferation by Iran and North Korea. Russia's perceived national interests do not always match those of the United States, creating an environment for disagreement if not conflict.
While U.S. exports to Russia are still relatively small, it is an important market for U.S. exporters of poultry, energy equipment, and technology. Russia is also an important supplier of a number of raw materials that are critical to U.S. manufacturers. These links have drawn the attention of some Members of Congress. Congress may consider in the near future whether to extend permanent normal trade relations (PNTR) status to Russia, among other issues.