Russian Security Market Holds ‘Huge' Potential, Says Frost & Sullivan

The economic crisis in Russia has affected many segments of its physical security market. This is mainly due to the fact that the security market is closely connected with sectors such as construction, oil and gas as well as the private and commercial sector. However, as the economy recovers, the public sector will be the greatest contributor to the growth of the physical security market in Russia, starting in 2009 and going into 2010. According to Frost & Sullivan, this will continue in the future thanks to the increasing number of federal, commercial, and oil and gas projects.

A new report from Frost & Sullivan, entitled "Opportunities in the Russian Electronic Security Market," covers the video surveillance, access control, intrusion detection, and security fire alarms segments. The study finds that video surveillance and access control are the most dynamic segments of the Russian electronic security market, with compound annual growth rates (CAGR) of 13 percent and 7 percent, respectively, over the period from 2008 to 2012.

"Part of the recovery of the Russian security market is driven by booming investments for the 2014 Winter Olympic Games in Sochi. On top of these 'one-off' investments, there is also the ongoing need for the replacement of older electronic security equipment for the many State-owned Russian conglomerates," said Frost & Sullivan Industry Analyst, Matia Grossi. "Small and medium enterprises and the industrial sectors were hit the hardest by the recession, mainly because of their direct correlation with foreign investments and overall economic activity. Nevertheless, the continued modernization of security equipment, especially in the, oil and gas and nuclear sectors will contribute to the recovery of the commercial sector."

The federal budget, which is used to financing many of the security programs, is based by more than 50 percent on revenues coming from oil and gas exports. In 2008 to 2009, many federal programs were postponed. However, as prices start climbing up again, it is highly probable that the government will restart postponed state programs and initiate new ones.

The economic recovery in many Asian Pacific countries and stronger ties between Russia and China are pointing toward a strong recovery of economic activity in Russia. Companies need to position themselves ahead of the curve to take advantage of the huge potential of the Russian security market.

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