Page 105 - Russia OUTLOOK 2023

IT Sector:

Russia’s Internet economy will increase by 24% in value terms in 2022
compared with 2021 to RUB11.8 trillion ($187bn), whereas the growth rate
will drop almost two-fold compared with previous years, director-general of the
Russian Association for Electronic Communications (RAEC) Sergey
Grebennikov said in a report at the Russian Internet Week 2022 on December
12.

Compared with previous years, growth rates will drop almost two-fold, he
noted, adding that the growth amounted to 41% in 2020 in annual terms, and
42% in 2021.

The decrease in growth rates in 2022 is connected with the still unfinished
process of adjustment to new instruments and solutions, the lack of
competitive Russian analogues in a number of solutions, initiatives in the area
of regulation of the advertising sector, as well as to consumers shifting to a
policy of frugality, according to the report.

RAEC believes that in order to restore the growth rate of Runet in the short
term it is necessary to ensure incentive regulation, primarily by minimising the
number of regulatory initiatives that have an ambiguous impact on the industry.
Moreover, it is necessary to maintain support of the sector until the full
completion of the process of adjustment to the new environment, with a focus
on the sectors of internet advertising and digital content.

"That said, it is impossible to fully return to the ‘pre-crisis’ growth rates without
completion of the period of turbulence and stabilisation of the macroeconomic
situation," according to the RAEC’s report.

The war in Ukraine has been a boon to Russia’s e-commerce, as this has
become the main channel for Russians to buy the international goods that
have disappeared from the shelves. The leading e-commerce companies have
been actively developing parallel import channels of supply, as many of them
had already diversified into other markets and developed the logistical ability to
import goods.

The volume of sales by Russian e-commerce expanded 1.5-fold y/y in the first
half of 2022 to RUB2.2 trillion ($36.4bn), the Association of Internet Commerce
Companies said on August 11, reports TASS.

"Total online commerce amounted to RUB2.3 trillion ($38.1bn) (an increase of
43% y/y) – this was the sum spent by Russians on Russian and foreign online
platforms. The domestic market accounts for RUB2.2 trillion from this amount,
which is 50% more than in the like period of the last year," the association said,

105 Russia OUTLOOK 2022 www.intellinews.com