Page 78 - RusRPTApr23

investment performance in several respects. According to Rosstat's quarterly figures, which cover large and medium-sized firms as well as the government budget sector (77% of total fixed investment), fixed investment was up by nearly 5% year-over-year in real terms in April-December. In contrast, the on-year change in fixed investment of other entities such as small firms, households, and the shadow economy was -2%, similar to that seen in previous recessions.
Investment developments also vary widely across branches in the wartime economy. Fixed investment in the energy sector increased considerably in April-December, especially in fields where state-owned enterprises play a central role.
However, in branches where private firms dominate, such as manufacturing, agriculture, and commerce, investment contracted sharply during the war. Investment fell in all but five branches, including chemicals, metal refining, and manufacturing of transport vehicles other than automobiles.
The government has also increasingly and in different ways influenced corporate investment and operations more broadly during the war. For example, in March, President Vladimir Putin issued a decree stating that failure of firms to uphold the conditions of contracts involving government procurement could result in the government taking over the company providing goods or services to the government.
During the war, the government has increased funding to its own fixed investment and joint investments with firms. According to Rosstat's fixed investment data, investment funding from federal, regional, and municipal budgets rose by nearly 30% year-over-year in real terms in April-October.
Even with waning budget increases, growth was still over 15% in April-December. This boost, however, did less to increase investment in state administration and mandatory social security or other mostly state-operated branches such as education, healthcare, as well as storage and support activities for transportation. Thus, state funding of fixed investments in other branches increased significantly.
Total government spending on the overall investment front has also increased much more as general government budget spending on fixed investment and inventories (including military branches) doubled in real terms in the April-October period. This reflects the situation that the government has made an even more brutal push in military investment and inventories.
Finally, a comparison of the general government budget spending on investment and total investment (including inventories) in Russia shows that funding of the respective investments from non-government sources such as corporations and households remained roughly unchanged in real terms from
78 RUSSIA Country Report Russia April 2023 www.intellinews.com