Page 17 - RusRPTApr23

investment and pipelines of various kinds accounted for an additional 10%. By comparison, net investment into value-added production and manufacturing actually declined slightly year-on-year, falling to about 2.1 trillion rubles.
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 investment and pipelines of various kinds accounted for an additional 10%. By comparison, net investment into value-added production and manufacturing actually declined slightly year-on-year, falling to about RUB2.1 trillion
($27bn).
“The nominal growth of public
spending (according to preliminary data, more than 20%) was exceptionally high
last year. This means that public spending grew by almost 10% in real terms. Expenditures in the federal budget grew particularly strongly (+25%). The increase in public expenditures was partly driven by the increase in public consumption and partly in public investments,” says BOFIT.
As a whole, the gross capital
formation recorded in the maintenance balance decreased by 3.2% from the previous year. The contraction was solely due to a huge drop in inventories, BOFIT reports.
“The uncertainty brought by the war,
the sanctions and the reorganisation of the logistics chains practically emptied the stocks of the companies. On the other hand, investments in fixed capital according to the maintenance balance definition grew surprisingly strongly (5.2%),” BOFIT says.
The increase in investments is
largely explained by investment projects started before 2022, supported by the public sector, and the state's own investments. For example, budget funding for
state-supported national projects increased by 29% last year. The largest of these are related to the construction of transport infrastructure. In addition, many acquisitions made for warfare are recorded in investments.
In the most recent manifestation of
this ongoing investment into transport infrastructure Russian President Vladimir Putin this week opened the
new $6.6bn “Big Circle” line of the legendary Moscow metro system to much public fanfare as part of the ongoing
development of Moscow's transport system.
The effects of the war year can be
seen on the production side of GDP as a very uneven development. The agricultural value added increased by 8% from the previous year, boosted by a good harvest year. There was no growth at all in the extractive industry
17 RUSSIA Country Report Russia April 2023 www.intellinews.com