Russia’s Prime Minister, Dmitry Medvedev has stated in a report to the State Duma that he wishes the Russian economy to be driven by SME’s, stating that “Small enterprises currently account for a little under 20% of the country’s economy. This figure should be at least 50%, as in other developed economies. This is the main goal, and, of course, it requires new tools.”
The Russian economy is expected to grow this year at a rate of about 2% following three years of recession caused in part by Western sanctions placed upon it, wiping out nearly all trade with Europe.
This is somewhat of an irony given that the EU economic performance is currently worse than Russia’s – whatever effect the sanctions have had may have damaged the EU rather more than they have Russia.
Since the introduction of sanction, the Russian economy has been re-balanced, with Russia forging ahead with alternative trading partners in Asia. The economy is currently producing a GDP of USD1.3 trillion in 2016, with a per capita income (PPP) of USD23,875. It is the worlds 12th largest economy.
Medvedev’s statement that creating a large entrepreneurial class “requires new tools” is interesting as it is already known that the State Duma is discussing changes to the tax code. If so, then it is to be expected that Russia may introduce tax incentives to encourage the development of SME’s and foreign investment, in order to maintain the new phase of growth in Russia and to deliver the 50% SME economic target.
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