Industry awaits discounts on equipment

The February market study of the state of affairs in industry, published by Sergei Tsukhlo (until recently published by the Gaidar Institute), records the stabilization of the balance of investment intentions in the sector at the level of January 2024. The indicator remains in the positive, and satisfaction with the volume of capex in the fourth quarter of 2023 almost reached the maximum of the third quarter of 2021, the survey data shows. “A significant shortage of capacity in a difficult and unstable geopolitical situation is not able to ensure stable investment plans of enterprises, as they were after the covid crisis and before the start of a special military operation,” notes Mr. Tsukhlo. Nevertheless, the capacity shortage in industry “due to expected changes in demand” is now significantly less than the personnel shortage – 20% versus 47% in the first quarter of 2024: the first is inferior to the estimates of January 2022, the second exceeds them.

Against this background, industrialists consider the reduction in prices for equipment and construction and installation work to be the most widespread incentive for investment activity in 2024 (noted by 60% of enterprises). “The implementation of such a scenario in conditions of high inflation, the departure of “Western” suppliers and the growing dominance of Chinese manufacturers seems unlikely,” the study notes. The use of credit resources in the absence of own funds to finance rising investment costs could support a reduction in loan rates – 40% of enterprises say this in 2024 (the Central Bank, we recall, does not consider the current level of rates to be an obstacle to capital investments). Companies’ mention of “clarity and predictability of the macroeconomic situation” as a factor stimulating investment decreased significantly (from 68% to 53%). This indicates that enterprises recognize the government’s successes in the “sanctions war,” says Sergei Tsukhlo.

Mutual sanctions have also reduced and remain at a low level (18–22%) the negative impact on the investment plans of competing import enterprises. The restoration of previous economic relations between Russia and the West can stimulate investment, according to 44% of enterprises, mainly due to the restoration of access to Western technologies and equipment, as well as to sales markets.

Artem Chugunov