Agency Report –
Russia is expected to see the return of Western companies after the Ukraine war ends, Vasily Astrov, a Russia expert at the Vienna Institute for International Economic Studies (wiiw), has said.
The market, with nearly 150 million citizens, remains too attractive to abandon permanently, Astrov told dpa on Tuesday.
This prospect is particularly enticing for German car manufacturers, which operated factories in Russia until 2022. “Currently, half of all new cars in Russia come from China,” said Astrov.
Besides German brands like VW, Mercedes-Benz and BMW, manufacturers from France, Japan and South Korea also held significant market shares in Russia in the past.
Western business dealings with Moscow appear largely on hold, with sanctions being the dominant issue. However, in current contacts between the United States and Russia, there has been a lot of talk about the restoration of economic relations.
Astrov highlighted that the number of companies that left Russia due to the war and sanctions is often overestimated.
Only 12% of foreign companies operating in Russia before the Ukraine war have completely exited the country. This is especially true for some large corporations.
“The medium-sized companies have mostly stayed but make little fuss about it,” Astrov said.
Russia has made it difficult for foreign companies to leave, introducing particularly high hurdles since the autumn of 2024. Moscow has also hinted that it will impose conditions on any returning firms.
The economic prospects for Russia, which has so far managed to limit the damage from Western sanctions, are seen as mixed by the economist.
“The global green energy transition is, of course, bad news for Russia,” Astrov said, referring to the country’s heavy reliance on revenue from oil and gas exports.
The mass exodus of particularly qualified professionals, especially from the IT sector, is also a burden.
Of the estimated 1 million specialists who left the country out of fear of repression and military conscription, some have since returned. “But hundreds of thousands are still missing,” Astrov stated.
Moscow has been pursuing industrial policy, such as promoting certain sectors, with little success for decades.
A more important economic stimulus is consumption. Wages increased by 9% in real terms in 2024.
Russia, the fourth-largest economy in the world, could in fact grow through its domestic market alone, Astrov explained.
By Matthias Röder
