Posted May 21, 2015 7:23 pm by Comments

Despite doom and gloom talk from Western analysts and political leaders along with gloomy economic numbers showing the impact the Russia sanctions are having on the country, it appears to be business as usual there – at least anecdotally. Ian Ivory, a partner at law firm Goltsblat BLP, has pointed out the following in a recent post on the Financial Times’ beyondbrics blog:

There are no Venezuela-style food queues, or queues for foreign hard currency. Shopping centres in Moscow are buzzing with people buying western imported goods, supermarkets remain fully stocked (although the steak is now Argentinian and not Australian), new cafés and other outlets are popping up everywhere and the usual temporary wooden terraces are being constructed on pavements outside restaurants to catch the summer tourist trade (these tourists being mostly Russians from other parts of the country, as has always been the case). Roads are still gridlocked, public transport still packed and the airports are overrun with Russian sun-seekers flying off to Florida, Rome, Turkey and Thailand, along with those travelling to other cities in Russia to reunite with relatives and loved ones.

He goes on to write that while some major western companies like Adidas have scaled-back, few have pulled out altogether because of the Russia sanctions. In fact, electrical goods retailer Eldorado has announced new plans for expansion and others like Nestlé, Burger King and Ikea have all reaffirmed their commitment to the Russian market – a picture that is in “total contrast” to 2008/2009 when the global financial crisis hit the country hard and deal activity “all but stopped.”

After all and despite the Russia sanctions, the following fundamentals remain unchanged as the country remains:

  • Rich in natural resources
  • The world’s largest country by landmass
  • The 9th largest population
  • The 6th largest economy by GDP based on purchasing power parity
  • The largest retail trade market in Europe
  • A nuclear-armed power and
  • A permanent member of the UN Security Council

Meanwhile and on the sidelines of the third annual Doing Business with the BRICS conference in Washington DC, Claret Consulting Managing Director Brien Desilets told (pro-Russia) news agency Sputnik:

“[T]he economic response of Russia has been the best it could be. There is a lot of capacity in Russia.”

Desilets went on to say that Russian companies had moved quickly and effectively to find new markets around the world to replace those in Europe and the United States closed to them by the Russia sanctions:

“They have focused on selling agricultural plants to Turkey and Brazil. And they are exporting their technology (including oil) refineries to Brazil and nuclear plants to Jordan”

To read the whole blog post, Russia: economy in tatters, or business as usual?, and article, Russia’s Response to Sanctions ‘the Best it Could Be’ – US Consulting Group, go to the websites of the Financial Times and Sputnik, respectively. In addition, check out our Russia ADRs list, Eastern Europe closed-end funds list, Russia closed-end funds list, Eastern Europe ETFs list and Russia ETFs list.

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