13 mind-blowing facts about Russia's economy
- Following World War II, the Soviet Union emerged as a global superpower to rival the United States.
- But after the Soviet Union crumbled in the early 1990s, Russia had to reinvent its economy.
- Markets Insider compiled 13 surprising facts about Russia's economy.
- Visit MarketsInsider.com for more stories.
Following World War II, the Soviet Union emerged as a global superpower to rival the United States.
But when the Soviet Union crumbled in the early 1990s and reemerged as Russia, it had to reinvent its economy. In the decades that followed, the communist nation has experienced plenty of economic struggles.
As Russia continues to try to reassert itself as a global power, it faces a fluctuating currency, declining population, and an economy that is in many ways dependent on oil and gas.
Here are 13 mind-blowing facts about Russia's economy:
The Russian population is decreasing by approximately 700 people a day, or more than 250,000 people annually, according to the Eurasia Daily Monitor.
Some cities, like Murmansk, have experienced population declines of more than 30% since the end of the Soviet Union.
The decrease is due in part to aging demographics, falling immigration rates, and a failure by the government to enforce health and food regulations. Some observers place the blame on Western economic sanctions, which have contributed to Russian poverty and economic uncertainty.
The decline could continue to pose problems for Russia's economy for years to come.
Russia has more than $460 billion in reserve, with a debt level of 29% of the gross domestic product and 15.9 months of import cover.
These basic macroeconomic statistics lead experts to believe Russia can withstand some global shocks, even if its economic growth remains at its low rate of approximately 1.5%.
From 1989 to 1998, Russian output dropped 45%, as the economic reforms following the Soviet collapse in 1991 took effect. By 2000, the nation's GDP was between 30% and 50% of its pre-collapse output.
Several factors are attributed for the post-transition recessions, all which made it a chaotic time with poor economic policies.
Russia is rife with oil, and its economy is heavily dependent on the resource.
By the end of last year, Russian oil production was at an all-time high, at 11.16 million barrels a day, according to Reuters.
In 2017, gas made up 59% of Russia's exports and 25% of its total revenue, according to the World Bank.
Russian President Vladimir Putin vowed in his state-of-the-nation speech last year that he would halve Russian poverty, which currently impacts more than 13% of the population. Official state statistics at the time showed 19.3 million Russians living below the poverty line, according to the Irish Times.
The speech highlighted an investment of 25.7 trillion rubles — that's $380 billion — in modernizing Russia's healthcare, education, infrastructure, housing, and agriculture to help those in need and potentially curb Russia's population decline.
Still, Russia's poverty rate has decreased significantly from the immediate post-Soviet rate of nearly 35%.
Russian wealth inequality is high and Moscow is often atop the list of global cities with the most billionaires — Russia as a whole has more than 70. Many of those billionaires obtained their wealth during the 1990s, when corruption swept through the country as it came out of a communist economy.
Oligarchs have plenty of influence in the Russian government and have started investing in the West, including in sports teams like the NBA's Brooklyn Nets, owned by billionaire Mikhail Prokhorov.
The Russian economy suffered a significant financial crisis from 2014 to 2017, which saw the ruble's value get cut in half.
Last year, the Central Bank of Russia blamed US sanctions on the ruble hitting a two-year low of 69.40 against the dollar. In 2013, the ruble was at 33 per US dollar.
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The economic crisis, as a whole, was caused by massive oil price declines in 2014 and international sanctions imposed on Russia when it intervened militarily in Ukraine.
Russia is ranked in the top 10 nations in terms of economic production. But despite the high GDP compared to the rest of the world, the average monthly wage is $670 — or 42,413 rubles.
That has grown since nearly 50% since 2016 — when it was $437.
Wages in Russian took a massive hit with the recent ruble instability as Russians were able to buy 40% more goods and services in 2013 than they could in 2018.
The Swedish superstore chain Ikea opened its first store in the Russian capital of Moscow in 2000, and the store quickly became one of the company's top stores.
Over the next 18 years, Ikea opened another two Moscow stores and a total of 14 stores across the massive nation.
With Russians looking to stretch their money further, Ikea now owns 20% of the Russian furniture market.
At the turn of the millennium, Russians bought 214.6 million decaliters of vodka — or 567 million gallons.
By 2015, that number had dropped to below 100 million decaliters, while champagne consumption jumped from 18.3 million decaliters to 23.6 million.
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The BBC cites a westernization of the Russian culture over the past two decades, with Russians shifting more toward beer and wine.
Asbestos are the key export of the aptly-named city of Asbest, Russia. Despite the well-known health hazards of asbestos, the city saw an increase in its asbestos output last year, according to The New York Times.
The 315,000 tons of asbestos produced from the city's mine last year was the first increase in production the city had seen in years. A full 80% of that output was sold abroad, including 67 tons to the United States.
Asbestos are banned in more than 60 countries.
During the Cold War, the US and Soviet Union competed for influence in Asia, and now Russia has turned its eye toward Africa. Both Russia and China have made massive investments throughout the continent trying to cement their influence.
In January, Russia made a $267 million investment in Zimbabwe's diamond industry.
Russia doesn't have the historical roots of other European nations, nor the money China holds, but its influence in Africa is largely affected by its military exports and state natural resource companies.
As the Winter Olympics descended on the Russian city of Sochi, the government spent more than $50 billion to get the city ready. The investment included not just the construction of new sports venues and hotels, but roads, bridges, low-pressure gas pipelines, and other infrastructure projects, as well.
But the investment seems to be working: Russian officials reported 6.5 million people visited the resort town in 2017, injecting life into a local economy that had once been known only for summer recreation.
In 2018, Russia hosted the FIFA World Cup, which reportedly cost more than $11 billion in construction and preparation work.