investments in the Russian economy increased by 9.8% in 2023

Rosstat presented data on capital investments in the Russian economy over the past two years. According to the department’s new estimate, in 2023 the figure increased by 9.8%, and in 2022, according to updated data, by 6.7% against the previous 4.6%. At the same time, updated data on the quarterly dynamics of investments in 2023 were published – in the first quarter their annual growth was 1% (previous estimate – 0.7%), in the second – 13.3% (12.6%), in the third – 14 .5% (13.3%), and in the fourth – 8.6%. The reasons for such a noticeable revision of the data are different – from additional accounting for large investments in large-scale projects (such as investments in Yamal LNG) to obtaining data from small companies and “revaluation” of the informal sector.

New data from Rosstat paints a picture of almost frantic industrial construction with both public and private money. The owners sought to complete the construction of industrial complexes, which began to be built in the “pre-Covid” and “pre-war” times, as quickly as possible, and to expand their logistics capabilities. In 2023, against the backdrop of unexpectedly high economic growth rates and massive investments in the military-industrial complex, private demand also grew rapidly, which could likely ensure a rapid increase in private investment by small companies (especially in the service sector).

Let us note that back in December 2023, Deputy Prime Minister Andrei Belousov did not rule out an increase in capital investments based on its results by 10%, and the FocusEconomics consensus forecast, updated in March 2024, assumed an increase of 8.4%.

Investment plans and sentiments of companies for 2024, judging by Central Bank surveys, remain elevated. The FocusEconomics consensus forecast is improving month by month, and its parameters have already exceeded the Ministry of Economy’s expectations for this year (2.3%, September estimate) and the February Interfax consensus forecast (1.2%).

The Central Bank notes that investment dynamics could become less sensitive to a high key rate due to record capacity utilization, rising labor costs, rising profits, optimistic expectations for demand, as well as high costs of stopping projects that have already begun, even with increased prices for loans. Meanwhile, the initial goal for the share of investment in GDP (25%) set in national projects in 2018 has not yet been achieved; in 2023, the figure reached a maximum of 22.4%.

Artem Chugunov