The Grant Thornton International Business Report (IBR) surveys over 11,500 businesses globally each year. The 2012 report focuses on Russian businesses and their outlook. It found that while the Russian economy grew 4.2% in 2011, businesses were slightly less optimistic than in 2010. Regulations and red tape were cited as major constraints. Optimism around employment, revenues and profits improved in 2011 but dipped in the last quarter compared to earlier in the year.

1. Focus on: Russia
International Business Report 2012 – Economy focus series
The economy The business perspective
The Russian economy grew by 4.2% in 2011, The Grant Thornton International Business Report
showing a gradual recovery over the past two years (IBR) surveys more than 11,500 businesses in 40
from the crisis of 2008-2009. High oil prices economies around the world. This report focuses on
following the Arab Spring have boosted revenues businesses in Russia and their expectations for the
and the government budget has been redrawn based next 12 months, as illustrated in figure 1.
on a price of US$93/barrel. At the same time the The IBR survey tells us that businesses in Russia
national economy remains heavily dependent on are slightly less optimistic about their economy over
world prices for natural resources, the budget deficit the next 12 months than they were in 2011. Business
without accounting oil and gas revenues increased to expectations for employment, profits and revenue
11.7%, well up from the pre-crisis levels (4.7% of have all improved since 2012, but bureaucracy
GDP). remains a major constraint on growth.
The key indicators1 are highlighted below:
• growth in the third quarter slowed slightly to
4.8% year-on-year
• industrial production rose by 4.8% from the
previous 12 months
• the inflation rate eased to 6.1% from the
previous 12 months, the best result for the last 20
years
• the labour market has now fully recovered after
the crisis: the unemployment rate for 2011 stands
at between 6.2% and 6.5%.
1
source: International Monetary Fund, The Economist and Experian.

2. The outlook
Figure 1: Key indicators for businesses
Russia’s economy is recovering, but the upgrade
process should be accelerated as it will reduce the Russia compared with the Global average 2009 2010 2011 2011
dependence of the state budget from oil revenues. Rus Rus Rus Global
Also, the Russian government considers priorities Outlook for the economy over the next
12 months
for its work in 2012 – raising living standards,
Net optimism over pessimism -2% 10% -4% 0%
reducing the number of people living below the
poverty line. For 2012, the economic growth Change in employment levels
forecast is at 4.2%, while consumer demand will Net hiring expectations -18% 14% 22% 28%
grow, and fiscal policy will weaken ahead of
parliamentary and presidential elections. Constraints on expansion
High oil prices allowed in 2011 to create a Regulations/red tape 25% 40% 42% 32%
surplus in current account balance of Russia at Shortage of orders/reduced demand 34% 51% 35% 31%
5.5%, but in 2012, surpluses will most likely reach Source: Grant Thornton IBR 2012
only 3.9%, due primarily to a record capital outflow.
Having climbed by 8.9 per in 2011, consumer
prices are forecast to fall back to 8.0 per cent in 2012
and 6.6 per cent in 2013. Public finances remain
vulnerable to a sudden drop in oil prices because of
the large non-oil fiscal deficit. Gross government
debt is expected to climb from 8.5 per cent this year
to 15.9 per cent in 2015.
The unemployment rate is forecast to fall to
around 5.0 per cent by 2015 but unfavourable
demographics pose a risk to the long-term health of
the economy: the total population and the
workforce are both expected to shrink over coming
years.
Talk to us to find out how we can help you deal
with the challenges your business is facing today.
Ivan Sapronov
T +7 495 258 9990
E isapronov@gtrus.com
W www.gtrus.com

3. International Business Report results
The results reveal that global business optimism Figure 2: Outlook for the economy over the next 12 months: 2003-2011
dipped again in the fourth quarter of 2011. Percentage balance of businesses indicating optimism against those indicating pessimism
Businesses sentiment for the next 12 months in 70
60
Russia stands at -4%, down from 9% three
50
months ago. 40
The sovereign debt crisis is weighing heavily on 30
businesses confidence in Europe; business optimism 20
10
across the European Union dropped to -17% in Q4.
0
However confidence in the BRIC economies ticked -10
upwards to 34%, driven by China and Brazil. -20
Q4 – 2010 Q1 – 2011 Q2 – 2011 Q3 – 2011 Q4 – 2011
Year-on-year optimism amongst businesses has Russia 35 15 11 9 -4
declined slightly from net 22% in 2010, to net 16% BRIC 54 57 44 25 34
across 2011. Global 23 34 31 3 0
Source: Grant Thornton IBR 2012
Optimism/pessimism
• business optimism fell again in Russia in
Q4-2011 to -4%, down from 9% in Q3-2011
• confidence across the BRIC2 economies rose
from 25% to 34% over the same period
• global business confidence dropped to 0%,
down from 23% 12 months previously.
2
the term ‘BRIC’ refers to these economies – Brazil, Russia, India and China.

4. Employment Figure 3: Employment history: 2006-2011
• expectations for hiring staff in Russia increased Percentage balance of businesses indicating an increase against those indicating a decrease
in 2011 to 22%, up from 14% in 2010 and -18% 60
50
in 2009
40
• globally, expectations picked up to 28% from 30
20% in 2010 20
• the proportion of businesses increasing reporting 10
0
employment increases in Russia in 2010 (20%)
-10
was higher than expected at the start of the year. -20
-30
2006 2007 2008 2009 2010 2011
Exp. Russia 22 53 49 -18 14 22
Exp. Global 35 45 33 -4 20 28
Act. Russia 40 37 21 -28 20 –
Act. Global 44 41 21 -8 25 –
Source: Grant Thornton IBR 2012
Revenue expectations Figure 4: Revenue expectations: 2003-2011
• the proportion of businesses expecting to Percentage balance of businesses indicating an increase against those indicating a decrease
increase revenues over the next 12 months in 90
80
Russia climbed to 53% in 2011, up from 38%
70
in 2010 60
• across the BRIC economies, expectations rose to 50
76% in 2011, up from 60% 12 months previously 40
30
• the global average is also up, rising from 40% to
20
50% over the past 12 months. 10
0
2003 2004 2005 2006 2007 2008 2009 2010 2011
Russia 65 52 57 58 76 80 6 38 53
BRIC – – – – 86 86 33 60 75
Global 44 58 63 61 70 63 11 40 50
Source: Grant Thornton IBR 2012

5. Profitability expectations Figure 5: Profitability expectations: 2003-2011
• net 43% of businesses in Russia expect their Percentage balance of businesses indicating an increase against those indicating a decrease
profits to rise over the next 12 months, up from 70
60
net 25% in 2010
50
• across the BRIC economies profit expectations 40
have risen from 40% to 64% 30
• similarly the global average has climbed from 20
10
29% to 39% over the past 12 months.
0
-10
-20
2003 2004 2005 2006 2007 2008 2009 2010 2011
Russia 50 41 41 57 50 68 -11 25 43
BRIC – – – – 74 63 10 40 65
Global 31 42 45 46 52 41 -5 29 39
Source: Grant Thornton IBR 2012
Constraints Figure 6: Constraints on expansion
• regulations/red tape is the primary growth Percentage of businesses rating constraint 4 or 5 on a scale of 1 to 5 where 1 is not a constraint
and 5 is a major constraint
constraint for businesses in Russia – it is cited by
42% of businesses as opposed to 32% globally Regulations/red tape 42
32
• a shortage of orders/reduced demand is cited by
Shortage of orders/reduced demand 35
35% of businesses in Russia 31
• a further 34% cite a lack of skilled workers. Availability of skilled workforce 34
27
Shortage of long term finance 29
23
Shortage of working capital 29
23
Cost of finance 28
23
Transport infrastructure 19
13
ICT infrastructure 14
13
Russia Global
Source: Grant Thornton IBR 2012

6. Support of lender Figure 7: Level of support provided by lenders
• 69% of businesses in Russia believe lenders are Percentage of businesses
supportive of their business 60
55
• this is slightly below the global average of 74%
50
• just 5% of businesses in Russia believe lenders 45
are unsupportive. 40
35
30
25
20
15
10
5
0
7 31 62 43 23 16 4 5 1 2
Very Supportive Neither Unsupportive Very
supportive supportive unsupportive
or unsupportive
Russia Global
Source: Grant Thornton IBR 2012
Corruption
Figure 8: Influence of corruption on business operations
• corruption affects almost one-in-three businesses Percentage of businesses
in Russia; it exerts a strong influence on 8 per 35
30
cent of businesses and an average influence on a
25
further 23 per cent 20
• however, a third businesses indicate that 15
corruption has not affected their business 10
5
operations, whilst 27 per cent have not noticed
0
any corruption. 8 23 33 27 10
Strong Average Has not affected Has not noticed Don’t know
influence influence my operations any corruption
Source: Grant Thornton IBR 2012

7. The Grant Thornton International Business Report (IBR) is a quarterly survey of 2,800 senior executives in businesses all over
the world. Launched in 1992 in nine European countries the report now surveys more than 11,500 business leaders in 40
economies on an annual basis providing insights on the economic and commercial issues affecting the global economy.
In Russia 400 businesses are surveyed every year across all industry sectors. These businesses range from medium to large in
size with total employment of between 100 and 499. Data for this report were drawn from interviews conducted between
January and December 2011.
To find out more about IBR and to obtain copies of reports and summaries visit: www.internationalbusinessreport.com. The
site also allows users to complete the survey and benchmark their results against all other respondents by territory, industry
type and size of business.
Participating economies
Argentina Malaysia
Armenia Mexico
Australia Netherlands
Belgium New Zealand
Botswana Peru
Brazil Philippines
Canada Poland
Chile Russia
Mainland China Singapore
Denmark South Africa
Finland Spain
France Sweden
Georgia Switzerland
Germany Taiwan
Greece Thailand
Hong Kong Turkey
India United Arab Emirates
Ireland United Kingdom
Italy United States
Japan Vietnam
www.gti.org
www.internationalbusinessreport.com
© 2012 Grant Thornton International Ltd. All rights reserved.
Grant Thornton International Ltd (Grant Thornton International) and
the member firms are not a worldwide partnership. Services are
delivered independently by the member firms.