Performance overview: Russian Federation
The Russian Federation fell into recession in 2015, with its GDP shrinking by 3.7 percent, but nonetheless remained rather stable in terms of its competitiveness (up two places at 43rd). This is partly the result of strengthened fundamentals, including the quality and quantity of education (up six places) and innovation capacity (up 12, although from a low base), along with an improved domestic business environment, and less negative domestic business sentiment than expected. Low commodities prices are affecting the Russian Federation somewhat less than other Eurasian economies: the level of government debt remains relatively low and gross national savings are almost unchanged. According to the IMF, economic measures such as exchange rate flexibility, banking sector capital and liquidity injections, limited fiscal stimulus, and regulatory forbearance “cushioned the shocks, and helped restore confidence and stabilized the financial system.”37 Nonetheless, the commodity price shock is still having a profound impact on the Russian economy: with sharply reduced public revenue and higher inflation, the Russian macroeconomic environment is much less sound, dropping to 51st place. The financial sector is suffering from a lower inflow of capital related to mineral revenues and the quasi-closure of international financial markets to Russian entities, as seen in the reduced availability of loans and venture capital.