How investments in Russia were distributed in the three quarters of 2023
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The rapid growth of capital investments – by 10% taking into account inflation in annual terms in January-September and by 13.3% in the third quarter of 2023, recorded by Rosstat and due to the low base of 2022 only in part, was mainly financed from the companies’ own funds (by 57 .5% versus 54.1% on average in 2017–2021). Net profit in the economy before taxes for the nine months grew by 24.3% year-on-year, also partly due to the low base, but in September to August 2023 the figure jumped by 63% thanks to the non-oil sector. “Profits have rather stabilized, thanks to high demand and inflation,” notes independent economist Dmitry Polevoy. In addition, in the structure of investment sources, the share of the budget increased (from 17% to 17.3%), loans from Russian banks (from 7.5% to 8.8%) and loans from other companies (from 4.8% to 7.7 %), the share of foreign investments decreased from 3.6% to 0.5%.
In the sectoral structure, investment growth primarily occurred in processing (9%), transport infrastructure (10%) and budget sectors (21.5%). “Budget investments are a subject of debate, since they are associated with non-market incentives, help support the economy in times of crisis, but may have a smaller economic effect in the future,” reminds the Gazprombank Macro Forecasting Center. According to analysts of the Telegram channel “Hard Figures”, the long-term leader in terms of capital investment has also changed: the transport industry has overtaken mining since 2022 (see chart) – together they are responsible for 31% of investments in fixed assets and about 40% of investments large and medium enterprises. Since the beginning of 2023, investments in the transport sector have amounted to 3.1 trillion rubles—1.4 trillion went to “warehousing and auxiliary transport activities”, 0.6 trillion each to railway and pipeline transport. Let us note that in general this is logical – the turn of transport flows to the East and the restructuring of logistics in connection with the refusal of many Western partners to work with the Russian Federation because of its military operation in Ukraine could not be free. However, the need to implement investment programs translates into rising costs. Thus, since December, freight railway tariffs have been increased by 10.75% (including a 2% surcharge for infrastructure overhauls); at the beginning of 2023, tariffs have already increased by 8% after 17% in 2022.
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