- It’s not spending lavishly on its defense budget (rather it spends a smaller percentage of GDP on defense than the United States).
- It’s not drinking itself to death (a ~2/3 decline in mortality over the last ten years).
- Its population is not falling off a cliff (though Russia’s population shrank rapidly from 1991 until 2008, it has since stabilized and has begun to grow).
- Its economy is not imploding or in free-fall (instead GDP per capita has increased from ~$8,500 in 2000 to ~$15,250 in 2012).
This is good news (or at the least not gloomy news) on each of these fronts. From my point of view, Russia remains an interesting investment environment because of the mismatch of perspectives within and without. My colleagues in the investment world with direct exposure to Russia’s growth economy are not packing up any time soon. Instead, they’re hoping the holders of the outside perspective leave them alone for a while longer so they can continue to invest smartly and generate strong returns without the pesky interference from London or New York (or Shanghai?) jacking up the valuations.
Is it enough to point at the scoreboard and say that the leading LP investor in Russia and Eastern Europe broadly has consistently generated 300 basis points more in returns than its benchmarks? Maybe not. But as a long-term investor and proponent of investments in emerging markets private equity generally, and Russia and the CIS more specifically, I’m happy the data are on my side.