Russia is turning the economic corner

According to London-based hotel industry research specialists, STR, the hotel pipeline in Russia is looking positively healthy, with more than 8000 new rooms across 42 projects. A growing economy, increased tourism numbers, Russia’s hosting of this year’s football Confederations Cup and the FIFA World Cup 2018, have all provided new opportunities for international hotel chains. Russian hoteliers are also upgrading existing hotels and improving standards to meet consumers' expectations.

And if more evidence was needed of Russia turning an economic (and in this case literal) corner, the country’s first driverless bus is due to begin trials later this year, before being showcased at next year’s World Cup in advance of serial production in 2020. Some 80 percent of the vehicle’s components are made in Russia.

Look around Moscow and other major Russian cities and you will see repeated evidence of Russia’s economic resurgence. Yes, there is money here, and lots of it.  And I have heard enough economists getting it wrong over the years, bankers describing Russia as a basket case and politicians laughing openly at the notion of a resurgent Russian economy. I have heard enough to know that they are wrong. What surprises me is that they don’t seem to realise what is happening in Russia. Look at the major industries such as food, automotive, mining, oil and gas. Yes, there are problems in all of them. But look more closely. Gradually, these industries are pooling resources, buying locally and changing horses if local solutions don’t pass muster. Russia is turning towards other nations for partnerships – India, Iran, China, Kazakhstan, to name but a few from a long list. The USA and Europe are just too much like hard work now. Russia is going for the low-hanging fruit.

And it’s working. Russia is a fully paid-up member of the World Trade Organisation and it is surging ahead in the World Bank’s Ease of Doing Business Report. Its industries are learning to stand on their own two feet - whilst we scoff and await its return to us, cap in hand.  It is not going to happen. And by the time the West wakes up it will be faced with a Russia where business negotiations are becoming much tougher, marking a confidence based on a stronger, growing economy. It may well be Britain that ends up stretching out its cap in hand.

Many Brits may not like this message. I will be accused of going native. That is most certainly not the case – there is a lot that is wrong with Russia. I will be accused of being naive, of not knowing the reality. No, I don’t buy that any more. Too many people have dismissed Russia and been spectacularly wrong. This time, I am sticking to my guns. Within ten years, Russia will be one of the world’s biggest economies and will certainly be larger than the UK.

We would do well to get down off our high horses and taking a reality check on Russia. Meantime, until that happens, my next business trip is to Tehran where I shall be talking to major Iranian exporters about how to get into the Russian market.  Because the UK just doesn’t get it. 

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