Despite Western sanctions over the 2014 reunification of Crimea with Russia, the peninsula’s economy has seen rapid growth both in terms of economic output as well as investments. This has left the republic with ambitious goals for its future development. According to the republic’s Minister of Economic Development Natalia Chaban, speaking at the recent Sochi Investment Forum, prognoses indicate that Crimea experienced 10% growth in gross regional product during 2017, with investments also surging. Andrey Nazarov, chairman of the board of the Yalta International Economic Forum Foundation, underscored Chaban’s sentiment, saying that there is a rapidly growing interest among Western investors to “fill the gaps” in Crimea’s economy, even before sanctions are lifted.
By Dezan Shira & Associates
The demand for foreign products into Russia has been significantly increasing over the past 12 months as Russia both recovers its economy from the drop in global oil prices and sanctions, and is moving into positive GDP growth rates. Pent up demand and a large consumer class are making the country an attractive proposition to sell to.
Russia is also a member of the Eurasian Economic Union, which allows goods imported into any of the member countries (Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia) to be freely transported throughout these nations. In this article, we explain the import and customs duties procedures.
German exports to Russia last year rose by more than a fifth over 2016, according to data by Germany’s Federal Statistical Office (Destatis). This marked the first increase since 2012 when German exports to Russia stood at €38 billion before they started shrinking on the back of an economic slump in Russia compounded by sanctions imposed on Moscow.
In the first 11 months of last year, German companies sold €24.1 billion worth of goods to Russia, with demand for machinery and cars being especially strong, the German Federal Statistics Office said on Monday.
Russia is well along the development path to establishing a Gambling Zone in Crimea, according to the regional head, Sergey Aksenov. He told reporters yesterday: “the gambling zone is to start operating [in Crimea] by September 2019”. The decision to establish such an enterprise was taken at the end of 2017, while a a preliminary location has already been decided upon.
Aksenov reported that the gambling zone has an investor that is ready to join in the project, but, considering the sanctions, he would withhold details for now as discussions are still on-going. “There is a large operator that is ready to join in the project implementation. <…> There are some aspects, chiefly linked to the sanctions regime, so there is a need to preserve the incognito for the one that will be doing it.”
US Needs to Decide Whether Unproven Allegations Or North Korean Missiles Are More Important after Latest Russia Wind Up
The United States has issued a “Kremlin list” of close associates of Russian President Vladimir Putin, naming 114 Russian politicians and 96 businessmen. It includes ten Russian ministers, such as Prime Minister Dmitry Medvedev, Defense Minister Sergei Shoigu, and Foreign Minister Sergei Lavrov among other high-profile officials. Though the new report does not automatically impose new sanctions, it paves the way for more anti-Russian restrictions as international banks will now be looking to limit access to any overseas accounts held by such individuals. The list was compiled under the U.S. Countering America’s Adversaries Through Sanctions Act (CAATSA), and released apparently in retaliation for Russian meddling in the previous US election campaign – despite there being no actual evidence released thus far that this took place.
Economic Counseller Maurice Obstfeld of the International Monetary Fund (IMF) has stated that Russia is among primary sources of global GDP acceleration along with the United States, Canada, Brazil, and Turkey.
That position was immediately echoed by Kirill Dmitriev, chief executive of the Russian Direct Investment Fund (RDIF), who commented:”Statements of the International Monetary Fund that Russia will be one of global GDP growth acceleration sources reflects objective realities evolved as a result of skillful monetary and budget policy, industry, and agriculture support measures, and stabilization of global oil prices. We in the RDIF believe that the Russian economy will be one of the most attractive for investments in coming years, and are ready to continue investing together with our partners into promising and quickly growing sectors, such as high technologies, construction of infrastructure, and agriculture.”
Armenia and Russia boasted the lowest inflation rates (consumer price index) in 2017 across the Eurasian Economic Union (EAEU), which includes Belarus, Kazakhstan, and Kyrgyzstan, according to the Eurasian Economic Commission, the executive body of the EAEU. The annual inflation recorded in Armenia was 2.6 percent, in Russia it was 2.5 percent.
Consumer prices in Armenia in December 2017 grew by 2.6 percent year-on-year with food products (including alcoholic beverages and tobacco products) growing by 5.3 percent, non-food products by 1.7 percent, while services dropped by 0.5 percent. In general, inflation across the EAEU in 2017 did not exceed the ceiling set by the Treaty on the Eurasian Economic Union. The threshold inflation for the Russian-led bloc at the end of 2017 was 7.5 percent.
Russia increased its import of goods from non-CIS countries in 2017 by 24.3 percent, year-on-year, to US$202.3 billion, the Russian Federal Customs Service said on Monday.
The total import of goods from non-CIS countries rose 11.3 percent, month-on-month, to US$20.7 billion in December 2017.
This is good news for businesses based in Europe and Asia, as it shows that the Russian economy is both expanding and developing pent-up demand for purchasing following the Western imposition of sanctions. CIS countries are the nations of the Commonwealth of Independent States, and include Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, and Uzbekistan. The CIS nations have their own trading status, and some are also part of the Eurasian Economic Union. Trade among EAEU members has also significantly increased as witnessed in 2017.
Russia has raised the monthly minimum wage level from January 1 to 9,489 rubles (US$165).
In Russia, the minimum wage is the monetary value of monthly wages, below which workers may not be offered or accept a job. The minimum wage is guaranteed by the Constitution of the Russian Federation (Article 7).
On September 29, 2017, the cabinet submitted the draft law “On Amendments to Certain Legislative Acts of the Russian Federation Regarding Raising the Minimum Wage to the Subsistence Level of the Working Population” to the State Duma, which is the lower house of parliament. The State Duma adopted the draft law on December 15, and on December 26, it was approved by the Federation Council, the upper house of parliament.
Strong rumors are circling that a new wave of US sanctions against Russia will be extended to a number of Russian businessmen from a much wider circle than the current US sanctions. If true, this is likely to mean that should named individuals be subject to US sanctions, they would at the very least be treated as equivalent to a “PEP” (Politically Exposed Person) and this may lead to the closure of their overseas bank accounts.
While previous sanctions against Russian PEP’s have largely been followed and enforced in Europe and other Western nations, they have not been adopted in territories such as the Asian banking centers of Hong Kong and Singapore directly. But it has become difficult for all Russians to open bank accounts in Hong Kong and Singapore during the past two years.