Page 16 - RusRPTApr23

According to published data on the
maintenance balance, private consumption shrank by 1.8% from a year ago, but
public consumption increased by 2.8%.
“The contraction of private
consumption is in line with the development of real incomes (-1% from a year ago), on the other hand, the contraction of retail turnover (-6.7%) would have predicted an even bigger drop,” BOFIT said. “The picture will certainly become clearer as long as the figures for the last quarter of 2022 are published.”
As bne IntelliNews has
reported, the economy has held up much better than was initially expected. In
the first months of the war even the Central Bank of Russia (CBR) monthly
survey of professional economists predicted a 15% contraction in the Russian
economy which failed to appear. One of the factors holding up growth was a
surge of both public and private investment; the state poured money into
putting Russia’s economy on a war footing, which companies
accelerated investment programs
to cope with the shock to supplies and markets caused by the wide ranging sanctions.
Companies big and small spent to replace foreign equipment
and software or channelled money into building new supply chains to reach alternative markets. Facing initial forecasts for a decline of up to 20% in capital expenditure, Russia instead saw it increase 6% in 2022.
Despite the early evidence that
defence spending was driving a surge of activity in the first half of 2022, the Rosstat data tells a slightly different story. Over 56% of all business capex was self-funded last year, a reflection of the fact that the systemic lack of aggregate demand, lack of predictability, and dependence on export sectors encourages firms to defensively accumulate reserves rather than invest steadily.
Total fixed asset investment — money sunk into building
factories, offices, various sources of productive capacity — hit RUB16.4 trillion ($217bn) in 2022, RUB12.8 trillion of which came from big business which is the more useful figure structurally as SMEs accounted for only about one-fifth of GDP pre-invasion.
Nearly half of investment went towards construction and a
third of spending went towards procuring equipment and machinery. Of all big business investment, only 17.8% came from government funds or support programs.
Resource extraction, namely oil & gas, accounted for about 20% of all
16 RUSSIA Country Report Russia April 2023 www.intellinews.com