Bloomberg: Russian economy coped with the consequences of sanctions due to record investments

Investments of the Russian government in business increased to record levels due to export earnings, writes Bloomberg. According to analysts at Bloomberg Economics, investment increased by 6% in 2022, although a decline of 20% was initially predicted.

As Russia struggled to counter the deficit caused by the sanctions, new private enterprises entered the market through government loans or subsidies. Government investments in the economy, the agency writes, confirm the further development of the new trade infrastructure.

According to Bloomberg, many companies are guided by their own funds, through which they are going to carry out investment activities (56.3% of investments). The share of state investments in business development amounted to 17.8%, another 11.45 investments were brought by credit organizations.

Most of the expenses of Russian companies are associated with the replacement of foreign equipment and software. Companies also increased investments to enter alternative markets, the agency said.

Olga Belenkaya, an expert at the Finam financial group, believes that investments supported by the government and state corporations may increase in the future, while private sector investments will decrease. Bloomberg Economics experts predict that in 2023 investment in fixed assets will decrease by 5%.

Most of all state investments were directed to the development of scientific technologies – 32.8%. The real estate market accounted for 12.5% ​​of government investments, 11.1% for transport development, and the mining industry received 10.6% of investments.

Western restrictions on the export of Russian energy carriers led to the fact that in order to finance the reorientation of exports to the East, Gazprom was forced to double its investment program. A similar reason, notes Bloomberg, forced oil producers to increase investment in transport infrastructure. The Russian mining sector was the largest source of investment last year, as company profits surged on the back of high commodity prices, according to the agency.

However, most companies are now focusing more on “survival” than development. A survey by the Bank of Russia showed that among small and medium-sized businesses, only one in four firms is preparing for a further increase in capital expenditures. Among large companies, a third is ready for this.

For more information on the development of the Russian economy, see material “b”.

Milena Kostereva