By Prakarsh Jain
The Russian Bear seems to come stronger and powerful than it has ever been before. It is sad to note that most Americans and other investors are yet to understand. The thought still has been chronicle; Russia is an “ex-superpower”, which was as such rendered irrelevant when the Cold War ended. Yes, when Cold War ended the bear was in rough shape. In the early nineties, Russia was an economic disaster zone. The currency was so worthless that a joke circulated, go exchange a 20-dollar bill and buy the Kremlin. Nevertheless, since that time Russia has roared back, and roared back to an extent, which is unimaginable.
Once Vladimir became the president, Russian economy started to grow up rapidly. It is now an economic powerhouse, which is blessed with abundance of natural and other resources. Debt to GDP ratio, a major concern for all forefront economies, is well managed and extremely small for Russia, and to the shock, they actually run a trade surplus year on year.
The investment opportunity is in there, and investors who are ignoring this fact, are missing to make an alpha out of the investment.
Russian Bear is back, and it is more formidable adversary than it ever was at any point. Let me put down some statistics, to make my point more meaningful.
- Russia produces oil, more than anyone on the planet
- Russia is number two oil exporter; States is forced to import more than anyone else
- Russia produces more natural gas than anyone else does, which is followed by United States.
- Russia supplies approximately 35 per cent of natural gas needs to Europe.
- Russia has a debt to GDP ratio of around 8 per cent, whereas States has a ratio of 101 per cent.
- United States has a huge trade deficit; Russia consistently has a large trade surplus.
- America has unemployment rate of about 7 per cent. Russia has of about 5.4 per cent.
- Russia has added around 600 metric tons of gold and other precious metal to their reserves over the past decade.
- Moscow, Russia’s capital is the second most expensive city in the world. On the other hand, United States has been the un-friendliest city in the world.
- More number of billionaires live in Moscow than in anywhere in the world.
- United States has the most powerful military in the world, Russia is in the second place
- It is estimated that Russia has more spies inside the United States today, then it had ever before
Unfortunately, as I mentioned earlier, whenever anything is spoken about Russia, most people do not get it. “The Cold War is over” or “Russia is our friend”, are the statements we get to hear, which shows lack of understanding of the current geopolitical situation and the opportunities in this economy. Russia has been building relationship with China, and together they represent the number one strategic threat to America.
Someday this will become abundantly clear, and hopefully it will not be too late, until when all the investment avenues in the economy turn against the investors.
Prakarsh Jain is a graduate from Jai Hind College, Mumbai and a Chartered Accountant. In full-strength to continue his passion for studying, he moved on to take up Masters of Global Business in Investment Banking & Wealth Management from S P Jain School of Global Management.In addition, he also acted as a delegate at the World Islamic Banking Conference: Asia Summit. Email ID: prakarshjain@gmail.com
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