The Kremlin, now at the center of a full-fledged market economy.

USSIA’S economy has seen tremendous growth over the last seven years. American companies, large and small, have entered the Russian market, while Russian firms in turn are on the lookout for opportunities to export or set up retail operations in the United States.

“The investment climate in Russia has significantly improved during the Putin years,” says Andrew Somers, President of the American Chamber of Commerce in Russia (AmCham). “Political stability, fiscal discipline, and three successive years of constant GDP growth—including a stunning 6.4% GDP growth for the first quarter of 2003—testify to Russia’s emergence as a strong investment candidate.”

According to Mr. Somers, American companies operating in the Russian marketplace are experiencing strong annual growth in revenues, market share, and profit margins, with the Russian operations of some U.S. global companies outperforming all other units worldwide.

He sees the development of Russia’s manufacturing industry and membership of the World Trade Organization, which he expects by the end of 2004, as “absolutely crucial” to Russia’s long-term economic growth.

Forecasts for growth have been revised considerably upwards as a result of oil prices staying high during the first quarter of the year. “Our original forecast was an increase in GDP of 4.6%,” says Arkady Dvorkovich, Deputy Minister of Economic Development and Trade. “Now it is at least 5.5%, and that is still conservative. More realistic is 5.8-5.9%.”

The process of economic reform has been speeded up. “We need to act quickly,” says Mr. Dvorkovich. “This includes administrative reform and restructuring of institutions, especially education and science as the basis for innovation and growth. It also involves the reform of monopolies—gas and electricity sector reform.”

Valery Goregliad, First Deputy Chairman of the Council of Federation, says that Russia needs help to develop sectors with high potential, such as the aerospace industry and IT, to increase the volume of its oil refining industry and develop its infrastructure. “We need to modernize our enterprises to guarantee long-term growth.”

According to Charles Ryan, Chairman of United Financial Group (UFG), state and legal institutions need to be stronger. “If the structural reform process addresses areas such as the banking system and the legal system, it will put in place conditions that will lead to the investment needed.”