Russia Economics - SMEs Becoming More Important for Economy

The SME segment represents one of the most important sources of growth potential for Russia. The government aims to boost employment in the segment, including those registered as self-employed (called "individual entrepreneurs" in Russian) from the current 19 mln to 25 mln by 2024. It also hopes to boost the share of smaller businesses in GDP from 22.3% to 32.5% and their share in exports from 8.6% to 10% over the same period. > SME turnover growing. In 2011, the combined turnover of small and medium-sized enterprises (not including the self-employed) was 44% of Russian GDP. In 2018, this figure was already up to 57.7%. Almost all industries posted average yearly growth above the rate of inflation. The one exception was the retail sector, where SMEs are being squeezed out by larger players. Since 2014, investment has risen faster among small businesses than among large and medium-sized enterprises.> Self-employment has risen. The revenues generated by the self-employed in Russia amounted to 14.4% of GDP in 2018, up from 13.4% in 2011. Over this time frame, employment in this segment rose 9.6% to around 6 mln. Meanwhile, the segment is becoming less concentrated in the retail sector.> TOT data suggests the SME segment will continue to grow. The data TOT provides to us gives us an early look at how the SME segment is evolving, as the State Statistics Service numbers only come out once a year, and with a huge delay. The data, which is collected from Sberbank clients and appears to be representative, allows us to conclude that turnover among small and medium-sized enterprises continued to outpace inflation in 1H19, while revenue growth among the self-employed was minimal.