Among the main problems of the Russian economy, we highlight:
- sharp unpredictable fluctuations in gas and oil prices;
- insufficiently coordinated work of the government;
- poor investment climate, lack of fair competition;
- poor development of infrastructure, energy sector;
- Population aging and low labor productivity.
Let’s analyze each problem in detail and try to find ways out of the situation, focusing on the experience of foreign colleagues, as well as numerous recommendations from experts.
PROBLEM No. 1. Sharp unpredictable fluctuations in gas and oil prices.
The Russian economy is seriously exposed to fluctuations in oil prices, which may arise due to the conflict in the Ukraine, the increase in pipeline capacity in America, or other situations of an economic or military nature. The economy and politics of Russia instantly reacts to events that have taken place in many countries, such as China, the USA, Japan, etc.
PROBLEM No. 2. Constant criticism towards other states.
The ill-considered actions of the Kremlin on the part of the population and the political elite, which creates tense relations between Russia and developed countries. Ill-considered foreign policy activity creates problems for the Russian economy, and quite serious ones at that.
PROBLEM No. 3. Attracting foreign investment.
The participation of the state in many aspects of the economic activity of large international companies and small national firms significantly undermines the country’s authority among investors, who are already terrified of the sanctions of the world community. According to the latest data, the PMI fell significantly, which indicates a depressive mood and pessimistic expectations of managers who see how the Russian economy and politics are floundering to stay afloat.
PROBLEM No. 4. Infrastructure development.
Given the volume of funding for the construction of new roads and air transport, Russia is still an outsider. Monies are being transferred to military expenditures. Gazprom profits are still being used to fill the pockets of the rich. Transportation of goods by rail is still more expensive than road transport, which is completely unusual for developed countries. It is urgent to take measures, controlling the use of each ruble allocated for the development of the industry.
Problem No. 5. Population aging and low labor productivity.
A decrease in the workforce, as well as the presence of morally and physically obsolete equipment and technologies, is holding back the potential of the Russian economy, which, according to experts, is really high. The situation may improve if the leaders of public and private companies pay more attention to staff training, renewal of fixed assets and improvement of working conditions. The young are trying to escape Russia seeing no future in a heavily sanctioned country with a negative population growth forecast.
Problem Solving and Russian Economic Policy
In short, it is necessary to overcome corruption, stop the war in Ukraine, increase labor productivity, create new jobs, and improve the country’s investment climate by carrying out competent foreign economic activity. The rapid development of infrastructure and the reduction of political influence on economic processes will quickly and practically painlessly solve the problems of the Russian economy, which have accumulated enough. It is necessary to gradually move away from manual management of the economy, based on the experience of China, which realized in time that the development of the state is possible only if the influence of a small group of citizens on all spheres of activity and socio-economic processes is reduced.