Invest not your own and with state support – Newspaper Kommersant No. 223 (7424) dated 01.12.2022

The growth rate of investment activity of enterprises in the Russian Federation in the third quarter reached its lowest level in two years, follows from Rosstat data. At the same time, business is reducing the financing of investment projects at its own expense, preferring to reduce risks and more actively attract government and bank funds. The question of the boundaries of state participation in private investment projects remains a key one in the discussion about stimulating business activity in the face of economic uncertainty and a decline in consumer activity – with a large-scale business support infrastructure in place, finding a balance of risks will remain a key topic in 2023.

According to Rosstat, in annual terms, in January-September, the growth rate of capital investments amounted to 3.1% after 4.1% in the second quarter and 12.8% in the first. In 2021, the three-quarter figure was 7.9%. At the same time, statistics recorded an increase in the share of investments in the construction of buildings and structures (47% versus 43% in 2021) against the backdrop of a decrease in investments in equipment and transport (33% versus 38%). Industry data also indicates a continuation of the trend towards simplification of the economy and an increase in the production of simple things when it is impossible to replace foreign high technologies (see “Kommersant” dated August 25).

Rosstat records a decrease in investments in the manufacturing industry (minus 0.9%): with an increase in investments in metallurgy by 8.7%, investments in the production of finished metal products decreased by 14%.

A decline was recorded in the production of electrical equipment (by 27%), vehicles and trailers (54%), and finished medicines (25%). According to the results of three quarters, investments in construction (by 23%) and in mining (11%), including oil and metals (by 11%), grew.

Statistics reveals the unwillingness of business to take risks in the face of uncertainty. Thus, according to the results of three quarters in the volume of investments, the share of own funds of companies decreased to 56.3% against 59.4% last year; the share of state financing for the year increased from 15.1% to 17.8%, as well as banking – from 10% to 11.4%.

On Wednesday, November 30, the shift in the balance of risks between the state and business in the implementation of investment projects was discussed at the Russian Industrialist forum-exhibition. The head of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, consolidated the request of industrialists to automate the enterprise support system by introducing clear requirements for support recipients, similar to the declarative mechanism of agreements on the protection and promotion of capital investments – the state cannot refuse to conclude agreements with investors if they meet the criteria. In this case, we can talk about a noticeable increase in the volume of state financing of business. In turn, Vasily Osmakov, First Deputy Head of the Ministry of Industry and Trade, warned at the forum that entrepreneurs should not wait for fundamentally new support measures, although the search for a balance of risks will continue. Business is not satisfied with the current configuration, Rosstat data on business activity show.

In November, the business confidence index continued to decline in processing – minus 3.7% after minus 3% in October and minus 1.7% in September. In production, the index also remained in the negative zone – minus 2% (after minus 2.3% and minus 1.3%, respectively).

At the same time, the share of optimists is higher in processing: 13% of respondents in production and 19% in processing expect improvement in the economic situation on the horizon of six months. The RSPP index also recorded a decline in business activity – the indicator fell by 0.4 points with a decrease in almost all components of the index (growth in purchase prices, a decline in demand for investment goods and the number of new orders and stocks, lengthening product delivery times). At the same time, according to Rosstat, the average level of capacity utilization in November 2022 is 58% in production and 60% in processing – and according to almost 90% of companies, this is enough, while the rest are confident in their redundancy. Among the factors limiting the growth of production, business traditionally names the uncertainty of the economic situation, insufficient domestic demand and taxes.

Diana Galieva