Despite the war in Ukraine and the exit of many foreign companies, Russia's economy remains resilient, with a GDP growth of 3.6% in 2023 and an expected growth of 2.6% this year. However, this growth is largely driven by defense and government spending, which may not translate to prosperity for many Russians dealing with high inflation. Major foreign companies like Nestlé, Unilever, and Mondelez are still operating in Russia.
Key takeaways:
- Foreign companies leaving Russia have already contributed $387 million to the country's budget as of mid-March, which is 17 times more than the expected amount for the whole of 2024.
- The Russian government has made it increasingly difficult for foreign companies to exit, requiring approval and often President Putin's personal signoff, especially for companies in strategic sectors like energy and banking.
- Companies leaving are required to sell their assets at a 50% discount and contribute at least 10% of their sale proceeds to the federal budget, a move Washington has called an 'exit tax.'
- Despite the war and company exits, Russia's economy remains resilient with a GDP growth of 3.6% in 2023 and an expected growth of 2.6% this year, largely driven by defense and government spending.