The Russian economy has been struggling as it treads on the difficult path of recovery ever since the former Soviet Union collapsed in December of 1991. Although Russia is known to be abundant in natural resources and equipped with a well-educated workforce, it has had limited success as it tries to get rid of the legacy of a centrally controlled economy and move towards a market economy. .
The ill-equipped Russian economy was hit hard as it tried to cope with the global crisis of 1998. During this period the Russian inflation skyrocketed, the GDP crashed, unemployment escalated and the living standards further dropped creating a major crisis in the country. However the somber financial situation ricocheted the following year and since then the economy has made substantial progress. This improvement has been reflected in a steady rise in the GDP, decline in inflation, drop in unemployment figures and increase in local and foreign investment. The main factors that contributed to the recovery after the 1998 crisis have been the competitive boost from the weak ruble and the trade surplus caused by the rise in world oil prices. Besides there have been encouraging initiatives taken by the current government under the leadership of President Putin to expedite the reform process that seem to be bearing fruit in the form of a much improved economy, high investor confidence and an overall improvement in the business climate.
Although there has been an upsurge in the economic situation in Russia, decades of communist rule has plagued the country with various problems that have to be dealt with effectively in order to maintain the positive trend in economic growth. Even though there are many industries in Russia, these industries are in poor condition and have to be replaced or modernized, there are issues over land ownership rights that have discouraged investment and restructuring, there is a serious problem of tax evasion and there is the huge issue of organized crime that has infiltrated the fabric of the Russian society.
