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Where Will Russia's Economy Be in 5 Year's Time?

The outlook for Russias economy at this years St. Petersburg International Economic Forum is very different very different than one year ago.

Published: May 23, 2014 (Issue # 1812)


Last May, Russia's economic growth far outshone that of both Europe and the U.S., which were then only beginning to emerge from a long period of stagnation. The economic integration of Russia and the West also seemed unstoppable. Now, in 2014, Russia stands on the brink of recession and the fallout from its clash with the West over the crisis unfolding in Ukraine risks demolishing more than two decades of economic bridge-building. Caught between the slump and the Wests cold shoulder, Russian officials have begun making noises about looking to fast-growing Asian economies for new partners and sources of growth.

In the run-up to the forum, The St. Petersburg Times asked three business leaders from different industries to look through the mists and predict how they think the Russian economy would fare over the next five years.

Philip Halperin

Independent director and financial risk advisor, former chief risk officer at Alfa Bank and advisor to the executive board at Gazprombank.

1. What will be the main driver of the Russian economy over the next five years?

Using the word driver to mean major determinant, rather than primary boom, the main driver of the Russian economy aside from oil, gas and armaments is concentration and lack of competition. What Russia has is not a capitalist system, but crony capitalism. Insiders are insulated from the slings and arrows of fortune, and margins are protected. We see, for example, insider agreements to get rid of food and electronics markets that undercut the prices offered by favored retailers, and the removal of exchange points in favor of banks. Competition is arranged away, and the consumer is not king. This has led to a sort of new zastoi, or stagnation, reminiscent of the Brezhnev years of the Soviet Union.

This fact has become part of the second driver, or major determinant, of the Russian economy disillusionment.

Business owners and managers milk profits rather than re-invest them, and the promise of the economy is becoming more a was than a will be.

2. Where do you see Russia-Western economic cooperation in five years?

Russia is a seller of raw materials which in five years will still be consumed by Western nations, each according to its perception of its own interests and as a consumer of finished products. In other words, Russia is a sort of a colony of the West. This is an old pattern, dating back to the days of Veliky Novgorod and the Hanseatic League Novgorod exported lumber and amber, and brought the products of Western mills. The major advanced products of Russia armaments and space technology will be not purchased by the West for political reasons.

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ALL ABOUT TOWN

Wednesday, Oct. 1


The St. Petersburg International Innovation Forum 2014 kicks off today at Lenexpo, where it will be presenting the latest and greatest ideas until Oct. 3. Focusing on economic development and the decisions and measures necessary to encourage development in Russias most important industries, the event is a possibility to discuss the innovations currently available in a variety of fields.


Representatives of the Russian and international media industries arrive in St. Petersburg for the first ever International Media Forum being hosted by the city until Oct. 10. With a variety of events on tap, including workshops, lectures and film screenings, the event plans to reemphasize the citys reputation as the countrys culture capital and as an emerging market and location for the visual arts.



Thursday, Oct. 2


The celebration of the bicentennial of the birth of Mikhail Lermontov continues with todays free exhibition in the citys Lermontov Library at 19 Liteiny Prospekt. Titled Under the Rustling Wings, the temporary exhibition will feature the costumes and scenery used in the 1917 production of Lermontovs play The Masquerade, which he wrote in 1835 when he was only 21 years old.



Friday, Oct. 3


Learn more about how to manage and evaluate employee performance during SPIBAs Human Resources Committee meeting this morning on Employee Assessment: Global and Local Trends. Starting at 9:30 a.m., the discussion will touch on such topics as the partnership between HR and business, reliable assessment strategies and more, with Tatiana Andrianova, the head of the SHL Russia and CIS branch in St. Petersburg, as the featured guest. Confirm your participation by Oct. 2 by emailing office@spiba.ru or calling 325 9091.


AmChams Procurement Committee Meeting is at 9 a.m. this morning in their office in the New St. Isaac Office Center on Ulitsa Yakubovicha.



Saturday, Oct. 4


Wine and cheese lovers will get their chance to revel during Scandinavia Country Club and Spas Wine Market Weekend. Going on today and tomorrow, wining diners can listen to live music, take part in culinary classes and, of course, sample a variety of fine wines from around the world. The cost of admission is 400 rubles ($10.30) for adults and 200 rubles ($5.15) for children.



Sunday, Oct. 5


Look for the latest fall fashions at the Autumn Market today in Freedom Anticafe at 7 Kazanskaya Ulitsa. The minimarket plans to offer clothes more flattering than the puffy jackets that are a staple of the citys cold-weather fashion, while offering the same amount of protection from the biting winds blowing off of the Baltic.



Monday, Oct. 6


SKA St. Petersburg, the citys KHL affiliate, welcomes Slovakian club HC Slovan in a match-up tonight at the Ice Palace near the Prospekt Bolshevikov metro station. The puck drops at 7:30 p.m. and tickets can be purchased on the clubs website or in person at either the arenas box office or the clubs merchandise store on Nevsky Prospekt.



Tuesday, Oct. 7


Learn more about Russias energy industry at the St. Petersburg Energy Forum that begins today and runs through Oct. 10. Attracting industry experts and political and business representatives, the forum plans to welcome more than 350 plus companies and their representatives to discuss the future of Russias largest economic sector.



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