Russia

The invasion of Ukraine in February 2022 has marked a radical shift in the perception of the Russian market and business environment. Boasting vast natural resources, a strategic geographical position between Europe and Asia, a sizable domestic market of over 140 million people and a skilled labor force, Russia used to attract significant foreign investment. However, the imposition of US and European economic sanctions, along with the associated reputational risks involved in conducting operations in the country, forced many companies to reduce their operations or exit Russia entirely.

The conflict is expected to have long-lasting implications for Russia’s economic future. Regardless of the conflict’s outcome, Russia is poised to confront challenges stemming from its heavy reliance on hydrocarbons, which contribute to about 40% of its GDP, as well as its inadequate infrastructure and dependence on foreign technology. Additionally, systemic structural issues such as widespread corruption, state interference in the economy and security risks will continue to hinder entrepreneurial dynamism.