Page 40 - RusRPTSept19

4.4 Fixed investment
Russia -Fixed capital investment 2012 2013 2014 2015 2016 2017 Mar-2018
Investment (% of GDP)
24.3 22.9 22.0 21.4 22.5 23.5 15.3
GDP: Gross fixed investment capital formation (USD mn)
471,337 496,982 428,573 276,240 280,350 342,294 58,303
source: CEIC
Russia’s fixed capital investment was almost flat in April–June due to an 11.9% year-on-year decline in government investment in January–May, the Economic Development Ministry said in a research note on August 7. But it picked up in July as the govt slowly gets to grips with spending some of the money allocated to the 12 national projects.
“According to the Economic Development Ministry assessment, fixed capital investment demonstrated close-to-zero dynamics in the second quarter of 2019, which was, among other things, linked to decreasing investment of the federal budget as compared to the same period of the previous year (an 11.9% fall on the year in January–May),” the document read.
The factor contributed minus 0.9 percentage points to the fixed capital investment dynamics in January–June, the ministry said. Investment in the construction industry was flat in the period. Investment in machinery and equipment imports from the non-CIS states dropped 3.6% on the year in April– June, and production of domestic machinery and equipment slowed down on the quarter in the three months.
In July, the central bank said fixed capital investment had decreased 1.3–1.8% on the year in April–June attributing the slide to lower government investment. According to the Federal State Statistics Service, Russia’s fixed capital investment grew 0.5% in January–March.
The Economic Development Ministry earlier projected a 3.1% rise of investment in the entire 2019, as compared with a 4.3% advance in 2018. It also forecast acceleration of the indicator to 7% in 2020, 6.3% in 2021, 5.8% in 2022, 5.6% in 2023, and 5.3% in 2024.
Deflation in Russia is highly likely to amount to up to 0.2% in August due to decreasing prices for fruit and vegetables and annual inflation will slow down to 4.4–4.5% in the month, the ministry also said.
The implementation of National Projects may notably contribute to the growth of investment activity in Russia, which is one of the national development targets, experts interviewed by the "Future Russia. National Projects" portal operated by TASS suggest. Analysts expect the growth rates of fixed investment in Russia to accelerate substantially thanks to investments both from the public and from private sectors in the second half of this year, as well as in 2020.
In the first quarter of 2019 the annual rate of fixed investment growth slowed down to 0.5% from 2.9% in the previous quarter, according to the Central Bank’s statistics. Whereas in the second quarter of 2019, fixed investment slipped by 1.3-1.8% compared with the same period last year.
40 RUSSIA Country Report September 2019 www.intellinews.com