Investments in Russia have been on the decline for ten quarters in a row, with the Russian Ministry of Economic Development forecasting a slow recovery, analysts of the Analytical Center write in the new bulletin dedicated to the current trends in the Russian economy.
2016 saw the investment decline in Russia continue: judging from the results of the first six months, the drop in fixed investments in all kinds of legal entities was 4.3% y-o-y, while 2Q 2016 became the tenth quarter in a row for fixed investments to decline in Russia, analysts explain.
Experts believe that the sectoral breakdown by large and medium businesses for the first six months of 2016 shows sustainable growth of investments into the mining industry (+7.5% y-o-y) and their recovery in the real estate operations and in the rent and service sector (+8.2%). A major negative contribution to the general dynamic in the first six months of 2016 resulted from the decline in investments in manufacturing (-6.5%), transport and communications (-5.2%).
Analysts of the Centre write that, according to the results for the first six months of 2016, the share of bank credits in total fixed investment financing was 8%. Loans granted to legal entities had recovered by mid-2015, rising back to the 2013 level, and then went down again; the 2016 July figure being 8% below the 2013 average,” the analysts report.
Also, the results of the first six months of 2016 show that 45 of Russia’s regions curbed their fixed investments (all kinds of legal entities, y-o-y), while 40 increased them (the 2015 results showed an investment decline in 58 regions, while growth was registered in only 27). In the developed regions the investment rate was below the 2008 level already in 2015–2016, mainly at the expense of the industrial regions: Nizhniy Novgorod, Kemerovo, Sverdlovsk, Novosibirsk, Samara and Chelyabinsk.
As for the share of the budgetary funds in investment financing, the highest was found in the least developed regions (36% in 2015) and in the metropolitan (27%) regions, whereas the share of bank credits was the highest in the developed (10%) and ‘average’ (9%) regions.
For more see the bulletin “Fixed investments and financing sources”.
You can find other bulletins covering the current trends in the Russian economy in the Publications section.