Assessment of the Russian economy in 2008 (December 2008, Vol.3, No. 11)

Assessment of the Russian economy in 2008

I would like start by noting that 2008 was filled with different events. The first half of 2008 was a continuation of the previous years and the economy grew simply by inertia, but the current crisis split the year into two blocks. I see this crisis as a rather positive moment. Certainly, each company now has to review and reorganize its development strategy, business plan and structure. But here also lies the ‘rational kernel’ as the crisis offers an excellent opportunity to look at one’s business from a new angle and also mobilize oneself, an approach that will give additional boost to companies’ energy. So, one can say that on one hand, 2008 was a difficult year because of the global crisis, while, on the other hand, the crisis has given companies new energy and challenges to conquer their markets, improve themselves and become better than competitors.

Company’s achievements in 2008 and plans for 2009

Our first positive change in 2008 was the new positioning of our company both in form and content. Direct Group moved into a new level of development, thus becoming a leader in Market Expansion Services in Russia. Secondly, we attracted new partners to two of our projects. These are three French investment funds – Ventech Capital, XAnge Capital and AGF PE, which have invested into our Internet project WomanJournal.ru. Currently, we are completing an agreement with the Otto Group, an investor in the NA DOM Group, a leader in the household goods segment of the Russian distance-selling market. These projects and the discussion around them are a great success for us. Thirdly, and this is particularly important, we continue to study the market with the aim of finding new opportunities and niches, where to invest and develop new projects. So, now and in 2009, Direct Group will be very active and open for new projects.

Prognosis for the Russian economy in 2009

I would not only focus on Russia, because one needs to consider the macroeconomic aspect of the current situation. All companies can be divided into two groups. The first includes companies that have huge debts, which will be consequently affected by the crisis, as they will have to find financing from other banks or the state. For companies in the second group with positive cash flows and less debt obligations, the crisis will offer them new opportunities on the market. Therefore, my prognosis for 2009 is as follows: depending on a specific company, next year will either be very difficult (for the first group) or very interesting (for the second group). But the crisis will continue for not just one, but about five years. Unfortunately, many projects and companies will be closed, but at the same time, new businesses will be founded. All these will last for about 5 years.

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