Articles / 10 Facts about Russia

10 Facts about Russia

By: Sarah Boumphrey 12/10/2014

Russia is never out of the headlines at the moment as a result of the situation in Ukraine and its parlous economic condition. Behind these headlines there lies a huge market of sharp contrasts – Russia is home to Europe’s largest number of high-earning young people, but is also a hugely unequal society. A small proportion of consumers’ budgets is devoted to housing, but consumer expenditure on tobacco has increased sharply. Russia has a huge land mass but a woefully inadequate road network.

Here are some key facts about this US$1,038 billion market:

1. Russia is home to the largest number of young high-income earners in Europe. Looking at the population aged 15-29 there were 126,400 people earning more than US$150,000 in 2013, 42.8% more than second-placed Germany. In Russia it is those in their 30s that have the highest average incomes compared to those in their 40s and 50s in Western European countries including Germany, UK, Italy and France. This is due to younger age segments being better positioned to prosper following the collapse of the Soviet Union.

Top 10 Countries in Europe Ranked by the Number of 15-29 Year-olds Earning More Than US$150,000 in 2013

Source: Euromonitor International from national statistics

2. Consumer expenditure on housing accounts for a very small amount of spending across all income levels. On average, households must devote just 10.0% of their budgets to housing costs, compared to 25.9% in France, 24.4% in Germany and 26.8% in the UK. The gap between Russia and other major European economies is most pronounced across low-income households.

Proportion of Expenditure Directed towards Housing in Major European Economies: 2013

Source: Euromonitor International from national statistics/Eurostat/UN/OECD

3. The road network in Russia is woefully inadequate. Russia accounts for 71.2% of the European land area, but its road network is a similar size to that of France, despite its land area being 30 times larger. In fact in terms of road network density (kilometres of road per km2 of land) it ranks bottom in Europe. This adds costs to doing business and can be a major challenge for fast moving consumer goods companies in particular.

Road Network Density in Selected European Economies: 2013

Source: Euromonitor International from International Road Federation (IRF)/Eurostat/national statistics

4. There is a huge difference between the life expectancy of men and that of women. Whilst this is not unique in Eastern Europe, the gap in Russia of 11.4 years in 2013 is the region’s largest. To put it into context, male life expectancy in 2013, at 65.0 years, places Russia at 145th in a ranking of 202 countries, 46 places below its position in a ranking of the same countries by female life expectancy.

Gender Gap in Life Expectancy in Selected Major European Economies: 2013

Source: Euromonitor International from World Bank/Eurostat/UN/national statistics

5. This gender gap in life expectancy carries through to the overall gender balance in the population. In Russia there were 10.8 million more females than males in 2013. Because of differences in life expectancy the differential is much higher for those aged 65+, where females outnumbered males by more than 2:1 in the same year.

Male and Female Population by Age: 2013

Source: Euromonitor International from national statistics/Eurostat/UN

6. Russia is over-reliant on its huge energy reserves. In 2013 it had the world’s second-largest coal reserves, its eighth-largest oil reserves and its second-largest gas reserves. This is equivalent to 17.6% of the world’s coal reserves, 5.5% of its oil and 17.0% of its gas. Mineral fuels accounted for 7.4% of GDP in 2013 but 70.9% of export revenue. In fact in 2013 Russia was the world’s largest exporter of mineral fuels. This reliance leaves the economy vulnerable to swings in energy prices as we have seen with the current weak oil price.

The World’s Largest Exporters of Mineral Fuels: 2013

Source: Euromonitor International from United Nations (UN), International Merchandise Trade Statistics

7. Despite its abundance of agricultural land – at 1.2 million sq km – arable land accounts for just 7.3% of Russia’s total land area. This is well below the European average, and significantly lower than in neighbouring countries, such as Ukraine, where 56.2% of land area is arable. In fact, at 3.6%, agriculture accounts for one of the smallest proportions of GDP in Eastern Europe. This issue has come under the spotlight recently with restrictions placed on food imports from the EU. The government is encouraging more self-sufficiency but the agricultural sector is impeded by low investment and low productivity.

Agricultural Land in Selected European Countries: 2013

Source: Euromonitor International from UN Food and Agriculture Organisation, FAOSTAT

8. Russia ranks particularly poorly in Transparency International’s Corruption Perceptions Index, at 136 out of 175 countries in 2014. It is ranked above only Ukraine in Europe and is surrounded in the rankings by lower income countries such as Kyrgyzstan, Cameroon and Madagascar. Corruption dampens economic growth at a time when Russia can least afford it.

Corruption Perceptions Ranking of Selected Major European Economies: 2014

Source: Euromonitor International from Transparency International

Note: Based on a ranking of 175 countries

9.In terms of income distribution, Russia is the most unequal country in Europe with a gini index of 0.421 – slightly more unequal than second-placed Georgia (0.420) and third-placed Greece (0.403). This inequality means that despite the average household disposable income being US$22,267 in 2013, only 27.8% of households had an income over US$25,000. In addition, almost one third of spending in the country was carried out by the highest earning 10% of households.

The 10 Most Unequal Economies in Europe: 2013

Source: Euromonitor International from national statistics

10. Russia has one of the highest rates of smoking in Europe. In 2013, 41.7% of the population aged 15+ smoked, behind only Georgia at 46.7%. Men are even more likely to smoke (with a prevalence of 59.4% in 2013) and Russia is at the top of the European rankings for male smoking prevalence. Despite a small decline in the proportion of smokers in the adult population, consumer expenditure on tobacco has increased substantially since 2008 – by 68.4% in real terms – more than four times faster than consumer expenditure taken as a whole. This equates to additional spending of US$9.9 billion between 2008 and 2013 – meaning that Russia accounts for 46.9% of the increase in spending on tobacco across the whole of Europe.

Real Growth in Consumer Expenditure on Tobacco in Selected Major European Economies: 2008-2013