Russian think tank warns of stagnating industrial output, investment

By Darya Korsunskaya

LONDON (Reuters) – Russia’s commercial production and financial investments are stagnating, its exports of products are continuing to weaken and success in a lot of markets is decreasing, a think tank near to the federal government has actually stated in a report.

The Centre for Macroeconomic Analysis and Short-Term Forecasting released its downbeat evaluation on Saturday, likewise alerting about a lack of imported elements and basic materials.

Regardless of Russia’s continuous war in Ukraine, its financial efficiency in 2015 went beyond the expectations of authorities and experts. In its month-to-month analysis of macroeconomic patterns for April, the centre stated it saw indications of a degeneration in numerous indications at the end of 2023 and the start of 2024.

The emerging patterns are a cause for issue, it stated, while long-lasting obstacles to the economy require services “here and now.”

“In the majority of the primary kinds of activity, the shift to stagnancy has either currently took place or is significantly noticeable,” it kept in mind, including that high rates of interest were starting to slow the development of customer need, viewed as an essential chauffeur of financial development.

In January and February, customer activity fell by 0.2%, omitting seasonality, according to believe tank’s information.

February was the 4th month in a row when financial investment activity had actually stagnated, it included, something it partially blamed on what it called the fatigue of previous “development concepts”.

Earlier financial investment jobs have actually concentrated on facilities, import replacement, the military-industrial complex and real estate, however financing conditions are now tighter and success in a variety of commercial sectors has actually dropped.

Success might fall even more, harming financial investment potential customers much more offered the troubles of private-public co-financing jobs, the centre cautioned.

Import limitations due to Western sanctions over the war in Ukraine and issues with payments were an additional barrier as some companies were seriously based on the supply of parts and basic materials, it stated.

“The possibilities of ‘low-cost’ (non-capital-intensive and non-innovative) import replacement have actually mainly been tired. Next, financial investments are required,” the report stated.

Russia can no longer count on energy profits and inexpensive labour for financial development due to sanctions on hydrocarbons and a scarcity of workers, it stated.

One service, the report recommended, would be to increase labour performance by additional automation and the higher usage of digital innovation and robotics.