Russia Outbound - November 2011
Russia is undergoing rapid changes – structurally, socially, economically and politically. Having diverged from its socialist roots, it has readily embraced capitalism, and living standards for the majority of its citizens have improved significantly in the last 20 years. Gross domestic product (GDP) per capita now stands at US$9,148 versus US$2,980 in 2003 – an increase of 207%. GDP per capita for Russia is about 6.3% higher than the global average of US$8,600 cited by the World Bank. However, its economy is still wholly reliant on commodities such as oil, and any downward shift in commodity values could therefore have a devastating effect on Russia’s economic prospects.
Crucially, Russia is home to a growing number of affluent middle-class individuals as well as millionaires and billionaires, who form the bulk of Russian travellers heading overseas, whether on business or for leisure. Indeed, about half of Europe’s millionaires are Russian and Russia is now home to 101 billionaires. It still lags behind its Cold War rival the US, who has 413 billionaires, as estimated by Forbes Rich List. Russia is home to 140 million consumers and is the most prosperous of the BRIC countries (Brazil, Russia, India and China). It is apparent that Russia has a lot of potential, and the outbound market will certainly grow in the immediate future.
However, the pace of growth could be capped, due to the anticipated decline in the number of individuals aged 25-54 years – who are the most inclined to journey abroad – over the next 40 years. Year-on-year growth in the Russian outbound market has been relatively robust, hovering around 10.2% between 2004-10. Between 2010-11, according to the Russian Federal Statistics Service (Rosstat), the number of Russians heading overseas jumped by 32%, signalling a recovery in the market after the steep decline in 2009 due to the recessionary effect of the global financial crisis.
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