SERGEI TSUKHLO: “THE RUSSIAN INDUSTRY IS GETTING DISAPPOINED WITH DEMAND’S MODERATELY NEGATIVE AND SUSTAINABLE MOMENTUM”
Sergei Tsukhlo, Head of the Business Surveys Department of the Gaidar Institute commented to the Nezavisimaya Gazeta daily on August business sentiments survey findings.
According to the indicators of industry, transport and energy consumption, the rates of economic recession in the Russian Federation can slow down somewhat in Q3 2022. In August, industrial output shrank by 1.5% on August 2021. Production of raw materials and energy consumption picked up. At the same time, the August surveys of enterprises’ sentiments register prevalence of businesses’ pessimistic estimates of their projections.
“Demand’s moderately negative, but sustainable momentum starts to disappoint the Russian industry, retains demand projections from entering the positive area and keeps enterprises participating in nongovernmental surveys from achieving sustainable output growth,” Sergei Tsukhlo says.
According to enterprises’ estimates, they sold fewer industrial products in August than in July. However, neither this indicator’s crisis-related collapse (as it was in 2020, 2008, 1998, 1996 and 1994), nor a bounce-back from the bottom of the crisis were observed, Sergei Tsukhlo noted. Also, Sergei Tsukhlo says output fell further in August. “The record-low official unemployment formed particularly owing to the Russian industry’s non-crisis HR policy makes enterprises to give up job creation plans, Sergei Tsukhlo added.
According to Sergei Tsukhlo, amid western sanctions the authorities’ anti-crisis support measures for business are not very effective. “A broad range of measures introduced by the government in the past six months has a rather weak effect on investment plans amid new conditions of sanctions. So, “the expansion of financial incentives (subsidies, guarantees and public ownership) and their easy availability” has a positive effect on investment activity of only 29% of enterprises, this factor’s minimum value since January 2014. In February 2022, this factor was important to 50% of enterprises,” Sergei Tsukhlo notes. Tax incentives influence now investment plans of 22% of enterprises, the monitoring’s eight-year low.
“Demand’s moderately negative, but sustainable momentum starts to disappoint the Russian industry, retains demand projections from entering the positive area and keeps enterprises participating in nongovernmental surveys from achieving sustainable output growth,” Sergei Tsukhlo says.
According to enterprises’ estimates, they sold fewer industrial products in August than in July. However, neither this indicator’s crisis-related collapse (as it was in 2020, 2008, 1998, 1996 and 1994), nor a bounce-back from the bottom of the crisis were observed, Sergei Tsukhlo noted. Also, Sergei Tsukhlo says output fell further in August. “The record-low official unemployment formed particularly owing to the Russian industry’s non-crisis HR policy makes enterprises to give up job creation plans, Sergei Tsukhlo added.
According to Sergei Tsukhlo, amid western sanctions the authorities’ anti-crisis support measures for business are not very effective. “A broad range of measures introduced by the government in the past six months has a rather weak effect on investment plans amid new conditions of sanctions. So, “the expansion of financial incentives (subsidies, guarantees and public ownership) and their easy availability” has a positive effect on investment activity of only 29% of enterprises, this factor’s minimum value since January 2014. In February 2022, this factor was important to 50% of enterprises,” Sergei Tsukhlo notes. Tax incentives influence now investment plans of 22% of enterprises, the monitoring’s eight-year low.