The economy of Moscow is the largest economy among the constituent entities of the Russian Federation in terms of gross regional product. The contribution of Moscow’s gross regional product to the overall Russian economy is gradually declining and by 2021 dropped to 16.5% because regional economies have often demonstrated greater potential for economic development by focusing on domestic and local demand, which global crises cannot affect. In the structure of the GRP of Moscow, the service sector, which is more sensitive to the global economic situation, occupies a significant part and trade and tourism also play an important role.
The volume of the Moscow economy in 2018 amounted to 15.7 trillion rubles, and consumer spending – more than 10 trillion rubles, which allowed Moscow to take third place among European cities in this indicator and become one of the twenty largest consumer markets in the world.
According to a study by the consulting service Numbeo, which compared indices of rent, food, restaurants and purchasing power, Moscow ranked 397th in the ranking of the most expensive cities to live in, in the first half of 2021. In 2022, it moved to 287th place.
The main branches of the Moscow economy:
• Trade (wholesale and retail) – 28% of the region’s GRP.
• Real estate transactions (rent and provision of services) – 27.4%.
• Manufacturing industries – 12%.
• Transport and communications – 8.5%.
• Public administration – 4.7%.
Now, Moscow is the largest financial center on a national scale and the center for managing a significant part of the country’s economy. For example, more than half of the banks registered in the country are in Moscow and account for 90% of banking assets. Most of the largest companies are registered and have central offices in Moscow, although their production can be entirely thousands of kilometers from the capital. As of November 2019, 104 of the 200 largest enterprises in the country are registered in Moscow.
In addition, it is a major center of mechanical engineering, including power engineering, machine tool, ship and instrument making; ferrous and non-ferrous metallurgy (production of aluminum alloys), chemical, light and printing industry. But in recent years, there has been a process of transferring production outside of Moscow.
Moscow and the Moscow Region lead the top regions in terms of retail trade turnover. Thus, in January-August 2018, the retail trade turnover in Moscow amounted to 3.01 trillion rubles, or 100.6% compared to the same period in 2017. Between January and August 2018, retail chains and individual stores formed 91.2% of retail trade turnover. The share of sales of goods in the markets amounted to 8.8% (in January-August 2017 – 12.3%).
The manufacturing industry provides 13% of GRP and 5.7% of Moscow’s tax revenues.
About 700 large enterprises operate in Moscow.
- Khrunichev State Space Research and Production Center
- Manufactured by RAC “MiG” (RAC “MiG”designs and manufacturesa third of the Russian Air Force fighters)
- Enterprises of the Almaz-Antey Air Defense Concern (the largest are Almaz, Altair, and Avangard)
- Rocket-building ICB “Vympel”
- The Moscow Engineering Enterprise was named after V. V. Chernyshev
- Moscow Machine Building Plant Vympel
- Moscow Brake Plant
- Moscow Machine-Building Plant Znamya
- Moscow Machine-Building Plant Forward
- NPTs gas turbine building Salyut
Moscow is the largest engineering center in the country. Here most Russian products a redesigned (especially aviation, space, nuclear and weapons), technologies for product manufacturing are developed and materials are studied. Among the design organizations, the best:
- KB Sukhoi
- Design Bureau Tupolev
- Aviation complex named after S. V. Ilyushin
- Yakovlev Design Bureau
- Design Bureau of Transport Engineering
- Moscow Institute of Thermal Engineering
- TsNIIPSK by N. P. Melnikov and many others.
There are other industries located just outside the city of Moscow, and microelectronic industries in Zelenograd, including Ruselectronics companies.
Gazprom, the largest extractor of natural gas in the world and the largest Russian company, has head offices also in Moscow, as well as other oil, gas, and electricity companies.
Moscow hosts headquarters of many telecommunication and technology companies, including 1C, ABBYY, Beeline, Kaspersky Lab, Mail.Ru Group, MegaFon, MTS, Rambler&Co, Rostelecom, Yandex, and Yota.
As of the beginning of 2021, 41 power plants with a total capacity of 10,865 MW operated in Moscow, including three hydroelectric power plants, 32 thermal power plants (including 16 power centers that provide power to individual enterprises), three waste incineration plants with associated electricity generation, two biogas power plants and one pneumoelectric generating unit. In 2019, they produced 52,559 million kWh of electricity.
In 2017, Moscow city budget revenues for the first time exceeded 2 trillion rubles, doubling from 2009. At the beginning of the decade, Moscow’s debt was about 300 billion rubles, and by 2018 this figure had been reduced by almost ten times to 34 billion rubles. In the structure of revenues over the decade, corporate income tax and personal income tax provided more than 70% of revenues to the city budget.
In 2019, investment in fixed assets in Moscow reached 2.86 trillion rubles, which accounted for 14.8% of total investment in fixed assets in Russia. The main source of funding (almost 78%) is extrabudgetary funds. The development of transport accounts for 20.1% of investments, the development of the industry and high technology sector (manufacturing, information and communication activities, research and development) – 19.7% of investments, the share of real estate transactions – 10.6%. The volume of investments per Muscovite in 2017 amounted to 162 thousand rubles.
As of October 1, 2019, the economy of Moscow has accumulated 251.7 billion US dollars of foreign direct investment.
In 2019, Moscow took first place in the rating of the Agency for Strategic Initiatives in terms of the state of the investment climate in Russian regions.
The Moscow authorities promote the development of the industry through a system of tax benefits and incentives. The city has a special economic zone called “Technopolis “Moscow”, 36 technology parks, industrial parks and 48 industrial complexes. Depending on the assigned status, various types of support, tax reduction and customs benefits are provided. The Moscow Industry and Entrepreneurship Support Fund gives preferential loans to enterprises.