recommendation on how to build business in Russia

Recommendation on How to Build Business in Russia
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Abstract
Russia is the world largest country. In this case, it provides a significant market potential to establish a business enterprise in this economy. With a population of more than 140 million people, the country indeed provides an extensive market for business establishments. As in the case of other countries, economic growth in Russia has gained momentum since 2017, this translates to a favorable external business environment constituted of improved terms of trade and the overall recovering terms of trade which have supported the country’s balance of payments positively. The most recent economic data of the Russian economy indicate a relatively favorable external environment that encourages entrepreneurship and business activities. With an increase in the country’s gross domestic product, stable political environment, low inflation levels and improved infrastructural development, establishing and building a business in Russia has now been made easier as compared to how the situation was some few years ago.
Recommendation on How to Build Business in Russia
Russia is the world largest country. In this case, it provides a significant market potential to establish a business enterprise in this economy. With a population of more than 140 million people, the country indeed provides an extensive market for business establishments. As in the case of other countries, economic growth in Russia has gained momentum since 2017, this translates to a favorable external business environment constituted of improved terms of trade and the overall recovering terms of trade which have supported the country’s balance of payments positively.

According to a report by the Business Monitor International (2018), Russia real GDP increased from 1.2% in 2017 to 1.6% in 2018. This indicates that there is a strong and improved domestic demand within the country spearheaded by an increased household spending and a rebound in the country’s fixed investments. In this case, business managers should seek to identify short-term investments projects with immediate returns as the country’s economic outlook is considered less risky during this period. According to the economic forecast by the BMI, Russia’s real is expected to stagnate at the 1.7% in the coming years which is attributed to the coming elections in March 2018. Therefore, a business establishment with an extended period of receiving returns would not be a suitable business establishment in Russia currently.
In 2017, the World Bank Group economic report on Russia indicated a decline in the country’s inflation rate from 15.6% in 2015 to 4.1% in 2017 (World Bank, 2017). The decline is mainly attributed to the country’s cautious approach to monetary policies. In this case, the data signals lower cost of factors of production in Russia. When entrepreneurs establish a business in Russia, as a result of the low level of inflation, it is expected that their profit margins will be increased due to the low cost of factors of production. However, the low rates of inflation in Russia can decrease the consumer demand. In this case, the manufactures ought to lower the prices of their products to attract more consumers.