Page 25 - RusRPTApr21

least confident of a rise in output over the coming year (global average: +32%).”
Markit’s findings tally with the results of the latest Rosstat survey that also showed a strong surge in optimism amongst Russia’s businesses.
As bne IntelliNews reported there was a remarkable upswing in business confidence in January, as confidence levels rose to -1, their highest level since May 2019 marking a return to pre-coronacrisis levels.
Markit’s panel agrees, with optimism reportedly stemming from the prospect of new client acquisitions, access to new markets and hopes of an uptick in customer demand, as the coronavirus (COVID-19) pandemic begins to recede.
“Firms also noted expectations of a successful vaccine roll-out and a resulting pick-up in consumer spending,” said Markit.
As bne IntelliNews noted in a December cover story “Brighter Days”, the fading pandemic is expected to release a year’s worth of pent up demand that should give economies around the world a major boost.
Risks remain
Although the mood is brightening, the pandemic is not over and there are still some potential bumps in the road.
Russian private sector firms said their the headline net balance is still below the series average (+29%). And rising inflation is a problem. Consumer price inflation (CPI) accelerated to 5.7% in February, well ahead of the Central Bank of Russia (CBR) target level of 4.25%, which has brought the regulator’s easing cycle to an end and may lead to growth-throttling rate hikes this year.
February data signaled expectations of increases in both staff and non-staff costs among Russian private sector firms. The net balance of companies that foresee higher staffing costs rose from +17% last October to +21%. In contrast, the net balance of firms forecasting higher non-staff costs dipped to the lowest for a year (+15%), despite some raising concerns regarding greater raw materials prices.
Private sector firms moderated their expectations regarding future increases in selling prices. The lower net balance (+28% in February, down from +32% in October 2020) was led by reduced optimism among manufacturers regarding their ability to raise output charges over the next year.
The ongoing pandemic and associated restrictions were also highlighted as risks, with firms uncertain as to the longevity of the epidemic. The authorities recently said that Russia may reach the herd immunity level of 70% of the population with anti-bodies as soon as this August – well ahead of the rest of the world – although some 40% of Russians say they won’t take the vaccine.
At the sector level, manufacturers and service providers registered higher net balances of companies expecting greater activity over the coming year, reports Markit.
“Although goods producers were the more upbeat (+22%), service sector firms
25 RUSSIA Country Report April 2021 www.intellinews.com