Catching on to Russia

Jeff Manera, July 07, 2008

Earlier this year, I told my subscribers that Russia is a country ripe for investment as it is benefiting from strong GDP growth, a huge infrastructure boom, huge budget surpluses and a fast growing middle class. At that time, not many investors had caught on to the opportunities that Russia has to offer. But now, the cat may be out of the bag now as the strong prospects for the region are becoming part of the mainstream media.

And for good reason. For the past five years, Russia's economy has grown at an annual rate above 7% and in 2007, GDP clocked in at 8.1%. The country is expected to grow around 7% this year, as well.

Much of this growth, as I said above, has been driven by an expanding middle class and the country's efforts to build out its cities. Combine this trend with Russia's infrastructure boom, and you can see how the country's economic base will be expanded, which will create more jobs.

It's also important to note that unlike many other countries, Russia's oil and energy sectors are booming, as the country is a major oil and natural gas exporter. So because Russia is self-sufficient in these sectors, it is more insulated from the inflation problems that other countries are experiencing. And, since oil and gas are a primary source of revenue for Russia, the country has been benefiting nicely from the commodities crunch, and I expect this trend to continue or even improve.

Continued on next page.

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