Page 22 - RusRPTJul21

2.9 Russian business and consumer confidence
The consumer confidence index, which reflects the aggregate consumer expectations of the population, increased by 3 percentage points in the second quarter of 2021 compared to the first quarter of 2021 amounted to -18%, as sentiment slowly improves amongst the population.
Business confidence is already at its highest level in eight years and in positive territory for only the second time ever. Business confidence improved from zero in April to 0.3 in May – the first time it has broken into positive numbers since 2012. However, in June the index fell back to zero again as concerns about surging inflation have dampened the mood somewhat.
The level of pessimism amongst Russia’s business community has fallen to an all time low of 4%, according to a study released by consultant Deloitte, RBC reported on June 11. The result was the lowest result since the survey were begun in 2015. Among the 76 CFOs of large and medium-sized businesses surveyed over half (56%) were optimistic about the financial prospects of their companies, the report found. “We can say that representatives of Russian business are confident that the crisis caused by COVID-19 has been overcome,” the study says.
Eight out of ten (82%) respondents expect income growth in the first half of 2021. In the second half of last year, only 40% of respondents expected that growth to continue. Just under two thirds (65%) of companies report they have already regain their pre-crisis level revenue levels or exceeded them, while half (49%) of respondents expect an increase in operating profit this year.
About 50% of respondents said they plan to increase their staff. 72% of respondents named digitalization as a priority business strategy. The key risk factors for 2021 are considered by the majority of respondents to be currency fluctuations and geopolitical risk (53% each). The growth of the indicator in terms of geopolitical risks amounted to 23 pp. A decrease in economic activity and a decrease in demand worries about 50% of respondents.
The Deloitte survey follows on from the Rosstat monthly business survey that went positive for the second time ever in May as business confidence recovers on the back of a growing post-COVID rebound. Improving sentiment has been helped by a calming of geopolitical tensions as US president Joe Biden and Russian President Vladimir Putin head to Geneva this week to try and forge a more “stable” relation as both leaders want to concentrate on fixing domestic problems.
Rosstat surveys show that despite a small bounce back from 1-2Q this year when the COVID caseload was lower, momentum for improving expectations about the economy and one’s finances have basically stalled since. Setting aside that expectations indicators have been negative for consumers for over a decade, they also parallel a degree of pessimism among businesses. Things may have gotten better from their worst, but the improvement won’t last. The following comes from the Rosstat survey assessing current economic conditions:
22 RUSSIA Country Report July 2021 www.intellinews.com