2

Russia ended 2008 with its tenth straight year of growth, averaging 7% annually since the financial crisis of 1998.

Over the last six years, annual fixed capital investment growth and personal income growth averaged above 10%, but both grew at slower rates in 2008.

Russia's GDP grew an estimated 6.0% in 2008, led by non-tradable services and goods for the domestic market.

3

Banking reserves reduced to $435 billion due to oil price drop by 70% since mid-July and central bank intervention to defend the ruble during the last quarter of the year.

Banking system faces liquidity problems against short-term external repayment obligations.

The ruble is devaluating; the currency has fallen 20% against the dollar.

Contraction in economy forecasted for the first two quarters of 2009, and full year growth expected to decline to 2.4%.

4

$200 billion rescue plan expected to increase liquidity in the financial sector, to help firms refinance foreign debt and to support the stock market.

The government also unveiled a $20 billion tax cut plan and other fiscal supports for society and industry.

Government outlined economic priorities for Russia include: improving infrastructure, innovation, investment, and institutions reducing the state's role in the economy reforming the tax system and banking sector; developing one of the biggest

financial centers in the world, combating corruption, and improving the judiciary

5

The number of dollar billionaires in Russia last year jumped from 61 to 101, with the country’s 10 richest people sitting on a combined fortune of $221 billion.

In 2007 Russia’s growth exceeded all expectations (7.6% GDP growth), accelerating in several key economic sectors such as retail, real estate, tourism, and communications.

Olympic Games 2014 infrastructure development : Tourist infrastructure — $2.6 billion Olympic venues — $500 million Transport infrastructure — $270 million Power supply infrastructure — $100 million

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Russian consumers are now the world’s fourth biggest spenders on high-end goods, after the U.S., Japan, and China.

By 2009 Russian consumers are predicted to account for 7% of global luxury goods sales, which would make Russia the fastest-growing emerging market in this segment.

Russian consumers are conforming to a global trend of increased demand for

luxury products, due to:

• Increases in income

• Easier access to international travel

• Increases in marketing directed specifically at Russian consumers by foreign

luxury good companies

According to the head of JamilCo, a distributor of European brands, the

luxury goods market in Russia will expand at an annual rate of about 20% in the years ahead.

2007 was an especially high growth year, when demand for luxury goods in Russia went up 60%, in that year alone.

Russian consumer culture is developing to the point where consumers are ready to spend money on brand names and labels that convey a unique message about who the purchaser is.

8

The market is becoming more attractive as authorities are planning on reducing restrictions on foreign ownership.

There are many dynamic sectors in the Russian economy today with enormous growth potential and attractive opportunities for foreign participation.

Increased opportunities for business partnerships.

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Serves as an umbrella organization for promoting trade and commerce

between the USA and the Russian Federation and the CIS countries;

Serves as an advocacy group for the American and Russian businesses;

Over 200 corporate members in the USA, Russia, CIS and Baltic States.

According to the Economist Intelligence Unit, Russia is one of the most attractive nations for foreign investment among transitional economies.

In particular, Russia is expected to become a leader in raising direct

foreign investment in 2006–2010 among ex-USSR states and Eastern European countries.

By the end of September 2006, cumulative foreign investments in the Russian economy came to approximately USD130 billion.

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1. https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html

2. http://www.economist.com/Countries/Russia/profile.cfm?folder=Profile%2DEconomic%20Data

3. http://www.russiablog.org/2008/07/market_and_industry_report_rus_2.php

4. http://russiatooat.blogspot.com/2008/12/russias-macro-data-starts-to-confirm.html

5. www.iht.com/articles/2005/09/29/opinion/rforeign.php

6. www.moneyweek.com/file/3101/luxury-goods-sector.html

7. http://nymag.com/daily/fashion/2008/02/americans_are_over_bling_but_c.html

8. http://www.europastar.com/europastar/magazine/article_display.jsp?vnu_content_id=1002273655

9. “Insider’s View: Russia”. Campaign (UK). 11/3/2006. Issue 44, p17

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