Page 11 - RUSRptSept18

Olga Tretyakova, the head of the marketing department for mass business of Alfa Bank, says business has follows the interests of consumers who are moving to the sharing economy model. "People take a taxi instead of driving their car. They take delivery of food and other goods instead of going shopping... This model of consumption begins to penetrate deeper, covering more and more services, crowding traditional formats of trade," Tretyakova explains. That is good news for services and small business, which is the most flexible and fastest moving segment of the economy, as they are the first to respond to this request, sums up Tretyakova as cited by Vedomosti.
This shift to the service sector is also visible in the services PMI index, which, unlike the manufacturing PMI, continues to expand . What remains unresolved is if this shift to a more services orientated Russian economy is enough to drive economic growth going forward. According to Rosstat, the retail trade turnover in June 2018 increased by 3% by June last year, and the semi-annual growth was 2.6%.
The authors of the study believe it is possible: 60% of respondents to Alfa’s survey say they are ready to change the business model or activity for adaptation to consumer behaviour.
The state is also pushing for changes in entrepreneurship. The survey showed that 14% of entrepreneurs had to rebuild business processes, because of changes to the law that have resulted in a heavier tax burden and falling profits. Part of the rising tax burden is the Ministry of Finance has revamped the tax service, which in turn has simply become a lot more efficient. For example, the “fly by night” shell companies scam – ephemeral legal companies set up to take a tax liability and then closed the day before payment comes due – have almost entirely disappeared in the last two years.
Separately, Alfa Bank drew attention to the first sharp deterioration in the mood in the IT sector, which has until now been the one truly dynamic part of the Russian economy. IT entrepreneurs are pessimistic about both the economy as a whole and the prospects of their own business. Traditionally, the IT industry differed among other industries with optimism and confidence, in addition, companies expected state investment in the development of the digital economy.
Now IT representatives are increasingly mentioning sanctions among their problems. However, Russian IT is also one of the most multinational parts of the Russian economy, heavily dependent on western markets for sales, investment capital and potential exits.
2.4 What impact would sanctions on Russian sovereign debt have?
The bill presented in the US Senate at the end of July could lead to a ban on Americans owning or trading Russian sovereign debt. Due to be read in the autumn, investors are wondering what impact it would have should it be adopted as law.
Most analysts agree that the bill would lead to a premium of about 50-100bp to the yields of newly issued bonds as well as a more general rise in risk perception of Russian assets. That would also cause the ruble to weaken.
The Countering America’s Adversaries Through Sanctions Act (CAATSA) approved by Congress last year prohibits US investors from undertaking transactions in newly-issued sovereign debt. CAATSA required the US Treasury to produce a report on the effects of expanding sanctions to include government bonds, although it ultimately decided not to pursue the idea.
11 RUSSIA Country Report September 2018 www.intellinews.com