Still, Russia weathered the crisis well. In 1999, one year after the crisis, real gross domestic product (GDP) increased by the highest percentage since the fall of the Soviet Union, the ruble stabilized, inflation was moderate, and investment began to increase again. Russia is making progress in meeting its foreign debt obligations. Russiaís sovereign debt has shrunken rapidly since 1998. High oil prices brought large fiscal surpluses of over 1% of GDP. This has allowed Russia to prepay part of its debt and repurchase private sector debt. Russiaís foreign debt fell from 64% of GDP in 2000 to just 28% of GDP in 2003. Russia continues to explore debt swap/exchange opportunities.

An upgrade in Russianís sovereign credit ratings by Moodyís to Baa3 in September 2003, and upgrade by Standard&Poorís to BB+ in January 2004, reflects higher confidence in the Russian Governmentís financial management. Credit ratings for Russian private debt remain low, however. Large current account surpluses have brought a real appreciation of the ruble over the past several years. The trade-weighted exchange rate of the ruble rose by 4% against the currencies of Russiaís major trading partners during 2003. Upward pressure on the ruble has been reduced by sterilization of some of the inflows and by channeling some of the governmentís fiscal surplus into a stabilization fund. This fund will help cushion Russia from price shocks should energy prices remain low for an extended period. The ruble appreciation of the past several years has given back nearly all of the terms-of-trade advantage that Russia gained when the ruble fell by 60% during the 1998 debt crisis. Loan and deposit rates at or below the inflation rate, as well as a lack of depositor confidence in the Russian banks, inhibit the growth of the banking system and make the allocation of capital and risk much less efficient than it would be otherwise. The Russian government is currently in the process of implementing a deposit insurance scheme as part of its banking reform efforts.

Money on deposit with Russian banks represents only 7% of GDP. Sberbank, Russiaís largest bank and 60% owned by the Russian Central Bank, is widely seen as enjoying an implicit state guarantee and so has attracted 63-65% of all bank deposits. The bank deposit insurance law passed in 2003 should gradually end this near-monopoly of Sberbank. Sergey Ignatyev in 2002 replaced Viktor Gerashchenko as Chairman of the Russian Central Bank. Under Ignatyevís leadership, necessary banking reforms, including stricter accounting procedures and federal deposit insurance, have been slow to be implemented; for example, the switch to international accounting standards was pushed back from 2004 to 2007.

Russian exports to the United States rose during 2004 to $11.8 billion. Chief 2004 Russian exports to the U.S. were fuel oil, inorganic chemicals, aluminum, and precious stones. U.S. exports to Russia rose to $3 billion. Chief 2004 U.S. exports to Russia were machinery, meat (mostly poultry), and electrical equipment.

According to the 2003 U.S. Trade Representative's National Trade Estimate, erratic customs enforcement has traditionally created problems for foreign and domestic trade and investment. The new customs code, which came into effect on January 1, 2004, has made some improvements to customs administration. However, full implementation has been not yet been achieved, and some customs facilities have been slow in making the shift to new procedures. In addition, a burdensome import licensing regime, including quotas for alcohol, has depressed imports of some products, including products containing alcohol. Uncertainty over Russian veterinary regulations cut U.S. poultry exports to Russia by 40% during 2002. Quotas introduced for poultry, pork, and beef in spring 2003 kept U.S. poultry exports below their 2001 peak. Large losses to U.S. audiovisual and other companies in Russia owing to poor enforcement of intellectual property rights in Russia is a growing irritant in U.S.-Russia trade relations.