Russian private wealth market expected to inflate by 40%, says Datamonitor
In the next four years the volume of the Russian private wealth market is expected to gain 40% on last year and a four-fold increase over the past decade, making Russia one of the best performers in Europe.
According to a private wealth report published by global data provider Datamonitor, the onshore liquid wealth held by high net worth individuals is expected to rise from about $230bn last year to $330bn by 2016.
The data analysis shows that the Russian wealth market has gone through a phase of rapid growth in recent years. In four of the past five years, growth rates have exceeded 20%.
Although this growth is expected to slow down in the coming years, Datamonitor forecast a constant level of growth in the next four years to 2016.
The factors boosting this growth will be the stabilization of the global economy, the higher oil prices and stronger domestic demand, the report states.
Russia’s recent accession to the World Trade Organisation will no doubt have something to contribute to these factors, as it is expected to boost employment and wages.
The unemployment rate has been steadily declining since the start of the year, from its peak of 6.6% in February to 5.4% in July.
Consumption levels in Russia remain high, according to reports by the World Bank. Consumers have indicated in recent local surveys that now is a good time to make large purchases.
This continuing demand is driving economic growth. Russia’s gross domestic product has been growing at a rate of 4% or more so far this year.
Although the International Monetary Fund (IMF) this week lowered its forecast for Russia’s GDP growth for this year from 4% to 3.7%, this figure still beats the Eurozone by a mile.
The Euro area has seen its economy contracting for most of the year, with negative GDP growth at -0.2% last quarter.
However, Russia’s economy and its wealth markets are not immune to the developments in the rest of the world, Datamonitor notes.
Its data shows the 2008 financial turmoil did impact the market, causing a decrease of 4% in liquid assets in 2008 and an 8% fall in GDP in 2009.
With this in mind, the forecasts depend greatly on the developments in the global economy, and the Eurozone in particular.