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Opinion
August 10, 2018 www.intellinews.com I Page 22
moved to dampen the growth in consumer loans by increasing prudential restrictions. However, the same has not happened with corporate lending which has been stagnant for almost a year, although it has increased somewhat recently.
The small entrepreneurs that Alfa surveyed said the main problems they face are: high taxes (46%), demand reduction (39%) and lack of funds for development (37%).
Business anxiety continues to grow against the background of increased tax and financial controls over small businesses and self-employed citizens, the study revealed. And there is an unspoken fear behind the practical worries: what will happen in 2024 when Putin is scheduled to step down, as
he is barred from running for president again by the constitution? Many middle class Russians are making contingency plans, buying property abroad or making sure their kids can speak English in case things go badly wrong in the transition to post-Putin.
In the meantime 83% of Alfa’s respondents believe that the current economic situation in the country hinders business development, and half believe that the situation will worsen in the next six months. About half of enterprises record a decline in profits, and a third experienced a reduction in the number of customers and purchases.
There may be something else at work here as at the aggregate level Russian businesses have been earning more profits this year than in the last two years, according to Rosstat figures. However, the aggregate is distorted by the large role oil and
gas companies play in the economy, so it could well be that while the commodity producers are pulling the numbers up as oil prices rise, the SMEs are being left behind and under pressure from the greater austerity being imposed by the government.
The SME respondents themselves seem a bit confused as Alfa found they estimate their own business prospects more optimistically than
the situation in the industry and the economy
as a whole. Since the autumn of 2017, the number of companies and entrepreneurs has increased and they expect revenue growth: 22% of entrepreneurs call their business successful — a share that has not changed from the last survey. In the PMI survey too panellists were basically optimistic about their prospects for the rest of the year, despite the slowdown in orders and shrinking backlogs.
One of the changes that is affecting all businesses dealing with the consumer is the rapid expansion of e-commerce that is seeing more and more of Russia’s retail business go online. This year, the Watcom Shopping Index that measures sales at leading Moscow malls has under-performed all three of the previous years since the index was launched, despite the fact that retail turnover is expanding again after two years of contraction and real and real disposable incomes are rising again since the start of this year.
Olga Tretyakova, the head of the marketing department for mass business of Alfa Bank, says business has followed 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