In recent weeks, the Export Service of the FIRSTonline newspaper has been dedicating ample space to emerging countries. The themes we are focusing on are essentially two: first of all, i recent economic developments of the aforementioned economies and, secondarily, the impact of such performances on Italian exports and investments. Starting from the assumption that the idea of drawing a single valid framework for all emerging economies is unthinkable, we have published and will continue to publish "country fact sheets" relating to the economy in question. Over the past few weeks we have talked about Mexico, Turkey, Argentina e Indonesia; today, instead, let's talk about Russia. Recently, the Export Service has dedicated several pages to the Federation: it has talked about growth forecasts for 2014 according to Intesa SanPaoloof recent developments of the Eurasian Customs Union (and the repercussions that this agreement will have on our exports) and, indirectly, we spoke of Russia referring to the aid promised by the Moscow government to Republic of Ukraine. In this article we retrace the conclusions of previous publications, focusing above all on export and investment opportunities in Russia and on the country's situation in terms of risk (commercial, political, etc.).
In the past year, the Russian political situation remained stable and anchored in the leadership of President Putin. The latter, on the one hand, does not seem to be in the least disturbed or scratched by the protests directed at him by various fronts in various fields (the latest arrival is the dissent of a large part of the international community for the approval of homophobic laws) but, on the other , keep planning deals Realpolitk for secure as many allies as possible for Russia. And here, in this last regard, Putin is doing his utmost to give life to the Eurasian Customs Union together with Kazakhstan and Belarus, to ensure a 15 billion dollar sovereign aid fund for Ukraine (pushing it, in fact, to abandon the Agreements with the European Union), demonstrate the size and resources of the country by staging the most expensive Olympic Games in history (it is estimated that the Olympics held in Sochi cost around $50 billion) and, news in the last few hours, host Egyptian General Abdel Fattah al Sisi in Moscow to discuss military cooperation.
If, therefore, the political landscape is growing the same could be said of that as well economic, but only with caution and the due premises. The past year has been a transition phase for the Russian Federation from an economically sluggish 2012 to a more stable 2014. In the months leading up to January 2014, investments fell by 1,1%, industrial production has entered a recession, yes. I am lost over 3 points on the GDP growth rate, the trend rate of inflation (6,5%) it was greater than that set by the Central Bank (6%) e the national currency, the ruble, depreciated by 10,5% compared to 2012 (data: Intesa SanPaolo Study and Research Service). However, despite the obstacles just mentioned, Russia's economic performance was promoted by the main agencies of rating and by the World Bank (not traditionally magnanimous institution when it comes to evaluating the economic performance of a country). Standard & Poor's, for example, after defining it as "highly speculative" (speculative grade) the sovereign debt of the Federation at the dawn of its default in 1999 and until 2006, has once again given confidence to the country by promoting its debt as "non-speculative" (investment grade): from BB-/Stable (14.10.2006) to BBB+ (13.12.2013). In the same way, the OECD has promoted to 3 (closer to 0 - non-existent risk - than to 7 - certain risk) the maximum assessment ceiling attributable to the country's emissions when, until October 2006, the same had a rating equal to 4. Improvements have also been made on the front of the World Bank, which deals with the “Doing Business Ranking”, where Russia has improved its position among the countries where it is easiest to do business from 120th place in 2012 to 92nd in June 2013. The World Bank, in this way, he acknowledged a number of improvements that had taken place in the country about some indicators used to draw up the ranking, such as: starting a business, obtaining building and electricity permits, registering property and transnational trade.
The results achieved by the Federation are due to a series of positive goals that have been achieved in the last period, albeit in conjunction with the negative findings we mentioned earlier, but they are not all attributable to a low external debt. First of all, Russia managed to grow its Gross Domestic Product (GDP) by 1,3% and it was thanks to the increase in exports that that 0,3% was added to the country's ultimate GDP. The trade balance is then supported by the amount of foreign exchange reserves and the availability of Sovereign Funds which last December would have been, respectively, 462 and 170 billion dollars (data: Intesa SanPaolo Study and Research Service). I am, therefore, Russia's growth prospects for 2014 are positive and this even in the light of the agreements which was referred to earlier. In particular, the Eurasian Customs Union together with Kazakhstan and Belarus it became the Common Economic Area e trade in the area was over $2012 trillion in 1.000. The three countries also agreed to harmonize their respective import certifications and from 2020 they will also comply with national laws in the banking, insurance and corporate fields. Based on agreements with the Kiev government, the Federation should then succeed in include Ukraine in the Customs Union as well thus ensuring, in addition to being a consumer of its energy supplies, also an important strategic ally.
So if this is the political-economic situation of Russia, what should Italian entrepreneurs expect with regard to their exports and investments?
From an "Italian-system" point of view, our entrepreneurs have on their side a competitive advantage that goes beyond "mere" commercial relations. Indeed, it is theappreciation for the products Made in Italy:, necessarily combined with the relations developed between Italy and Russia in recent years, which represents a point a favor of the Italian manager. Just think of the high symbolic value given by the presence of the – for a little while longer – prime minister Read at the opening of the Sochi Olympics, whereas other Presidents have preferred not to take part in the start of the winter games (see, for example, Obama, Cameroon, Hollande and Merkel) as a sign of disapproval of the recently enacted homophobic laws. The Italian market and the Russian market are then definable as "complementary" "since Italy mainly imports raw materials while it exports manufactured products that Russia acquires mostly from abroad" (source: ICE). However, if we were to base ourselves on the considerations just made, we would provide a distorted view of what the Russian market really is. Those who have already traded with Russia (or have tried) know that the Federation has a whole range of difficulties, such as: a articulated country-system, complex distribution system, customs barriers and costs, the costs to Direct Investments World (IDE) and a very competitive market (source: Finest). So, from the point of view of individual entrepreneur, the issue of exporting and/or investing in Russia must, however, be thought out and strategically prepared. Since 2003, Italy has continued to maintain a very low percentage of Russian imports (only 4,2%), whereas Germany, although decreasing, holds 12,1% of the quotas. The investment and profit opportunities on the Russian market that have not been missed and the four "A"s of Made in Italy are traditionally the driving force, however, it is necessary to know catch even the most recent news. First of all, as reported by SACE, the possibility for entrepreneurs to be able to invest their foreign capital also in the energy sector. A proposal also supported by Eni's CEO, Paolo Scaroni, who in recent days, speaking of how uncompetitive Italy is in attracting foreign capital due to high energy costs, proposed to strengthen the agreements with Moscow. Therefore, for the Italian entrepreneur, i traditional sectors of Made in Italy for regarding export and energy sector for investment. But let's talk about risks. According to SACE, the risk of non-payment it is higher when the counterparty is a SME (58/100) or a bank (72/100); more reassuring are instead those situations in which the payment is disbursed by a public institution (36/100) or a large company (47/100). The risks involved expropriation and contractual violations remain placed in a medium-high range, respectively 68/100 and 75/100 and the same range also includes the risk of political violence (67/100). One way to circumvent many of the obstacles that may arise on the Russian market involves the destination of investments or production in the so-called "Special Economic Zones” (ZES). An Italian entrepreneur directing his business to one of the 28 SEZs available on Russian territory will in fact find one different legislation from that in place in the rest of the country and will therefore be able to take advantage not only of tax relief need bureaucratic assistance but above all, protect your own property right. Certainly, however, that of holing up investments and production exclusively in the ZES does not represent an optimal decision for all entrepreneurs and it is for this reason that the various institutions try to keep "up to date" by installing branches directly in the territory of interest. Examples of Italian institutions present in Moscow are the SACE, Finest andICE. The former, in addition to offering a whole series of guarantees and insurances, has also recently entered into a agreement with the Russian development bank Vnesheconombank (VEB) to facilitate economic relations between Italy and the Russian Federation. Finest activated the project “Bridge to Russia” to offer Italian companies in the Northeast who want to try to enter the Russian market the collaboration of national institutions present both in Italy and in Russia. Finally, theICE offers various assistance services ranging from information gathering to the implementation of fairs and system missions.
Ultimately, it needs that make yourself as competitive as possible is the first objective of the Italian entrepreneur who decides to focus on Russia. The second must be to commit to constantly monitor the market trend and the opportunities it offers. And the third, finally, must concern the start of collaborations with the competent institutions, trying to plan and not run unnecessary risks which, in a market as large, complex and constantly evolving as the Russian one, there really isn't a need.
