[Deb Palmieri on Russia Table of Contents] The following article was published in the Russian Commerce News, September-October 2000. The Russian Commerce News is the official publication of The Russian-American Chamber of Commerce®. |
The ability to project economic performance is critical for company short and long-term planning. Russia presents an especially unique environment for foreign investors: its potential is so great; while its risks, uncertainties and problems can be seen as overwhelming. Thus, more resources and planning are required to stay on track, and hence the ability for accurate forecasts becomes all the more pressing.
The next several pages provide you with Moody's Investor Services data that was presented to participants at the 8th Annual Meeting in Denver on September 27, 2000.
These include key economic statistics, such as GDP growth and unemployment rate, current account balance, domestic debt, government budget, external debt service and more. There are also data provided which casts Russia in a comparative context with other countries, including China, Brazil, Mexico, Indonesia, Poland, Korea and more. Variables analyzed in such a comparative context include GDP per capita, GDP growth rate; central government borrowing external debt, current account and gross international reserves.
As we contemplate Russia's economic future, there are a few caveats to bear mind.
One is that conventional thinking posits that generally strong and predictable economic performance in foreign territory is a central and necessary condition for foreign direct investment. But life is often more complicated. Sometimes you can't predict political and economic outcomes with a high degree of accuracy. Such is currently the case with Russia, and this fact has constrained capital flow into Russia.
But it may be that in some cases, under conditions of suboptimal country economic performance that a company can benefit. Certain schools of investment theory argue that the time to get in for the long-haul is the point at which current economic performance may be bleak, but harbors potential for the future. Bottom line: Russia may be seen as imperfect by our customary standards of evaluation, but it has unique endowments that will bear fruit over time, and offset risks.
Another caveat is that despite market imperfections, many companies thrive due to what I identify as "optimal niche survival" strategies. That is, despite all the disincentives, they learn to create wealth and produce effectively through a keen knowledge of their industry and operation and a skillful approach to developing relationships and linkages that work to create value.
Keeping these points in mind as you gauge and evaluate Russia's future economic performance can provide important clues to investment viability.
Deborah Anne Palmieri
Russian Commerce News, September-October 2000
Copyright 2001 The Russian-American Chamber of Commerce®