Pest Analysis of Russian Retail Market

1179 Words Nov 21st, 2012 5 Pages
PEST Analysis
The PEST analysis is used in this report to evaluate the political, economic, social and technological aspects of the macroeconomic environment in the targeted market, Russia. This study helps to frame the basis for the decision-making about a possible market entry. Thus, it is of vital importance to scrutinize the macroeconomic environment as part of the market research.
Political and Legal Aspects
According to the Russian 1993 Constitution, Russia is a democratic federative state with a republican form of government grounded in the rule of law (pwc, 2012). After the fall of the Soviet Union in 1991, Russia has gradually opened up and after a seven-year transitional period with numerous market reforms, political stability
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(pwc, 2012) The country further integrated within the world economy by entering the World Trade Organization (WTO) in 2012 (Datamonitor, 2011).

Economic Aspects
Russia of 2011 is characterized by a per capita GDP (PPP) of $16.750, GDP and FDI growth of 4.3% and 33% respectively. Furthermore, the ease of doing business in the country improved by 4 ranks between 2011 and 2012 and hence Russia is ranked 112th in 2012 (Datamonitor, 2011; pwc, 2012).
Historically successful economic reforms during the 1990s led to liberalization of the Russian economy and to high growth rates. Yet, the global economic downturn beginning in 2008 led to a negative growth of 7.7% in 2009. However, the country’s economy managed to quickly recover, achieving a 3.9% GDP growth in 2010, mainly due to the high oil prices (Datamonitor, 2011).
Improved competitiveness and higher oil prices facilitated a turnaround in the current account, from a deficit in 1998 to a surplus of 12% of GDP in 1999. Since 2000, Russia has maintained a current account surplus, which dropped from around $102bn in 2008 to around $47bn in 2009 (Datamonitor, 2011; pwc, 2012).
Current challenges in Russia’s economic landscape include a high budget deficit and a banking system being under continuous stress. Moreover, the unemployment rate of 6.6% is another

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