While investing in Russia is often synonymous with oil, it is important to remember the huge growth in personal incomes since the fall of the Soviet Union. As the proportion of Russians with per capita income above RUB 20,000 per month has grown to close to half of the population, spending power has increased. As a result, industries such as retail, Internet, and consumer banking have seen double digit revenue and earnings growth since the 2008 crisis. Despite the current Russian macroeconomic slowdown, we still see long-term growth in these areas as consumer spending in Russia catches up to levels of its peers.

Consumer Expenditure as % of GDP, 2014

Source: Euromonitor

Consumption Expenditure CAGR (2009-2014)

Source: Euromonitor

About the Author:
David I. Feygenson (MS, Finance and Economics, London School of Economics; BS, Economics, The Wharton School, University of Pennsylvania) is a Senior Emerging Markets Equity Analyst at VanEck. Mr. Feygenson has over a decade of buy-side investment experience and previously held positions at Wellington Management Co and Mirae Asset Global Investments.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.