Evgeny Goryunov, Head of the Monetary Policy Department at the Gaidar Institute, explained in a commentary for Nezavisimaya Gazeta the reasons behind the slowdown in industrial growth and the impact of high key interest rates on business investment activity.
According to the expert, it is too early to conclude that the growth in investment has not led to an increase in labor productivity. This indicator does not always objectively reflect the economy’s efficiency, especially during a period of structural restructuring. At the same time, the expert does not rule out the possibility that a significant portion of the investment was directed toward replacing unavailable foreign technologies and production capacity. In that case, the investments made it possible to maintain the existing level of productivity but did not ensure its significant growth.
“I see three main factors behind the slowdown in industrial growth: tight monetary policy, a general rise in real costs, and an extreme level of uncertainty. High real interest rates are indeed holding back investment, while the rising tax burden, sanctions, labor shortages, logistical problems, and other costs further reduce incentives for businesses to invest in development,” noted Evgeny Goryunov.
The economist also pointed out that many business leaders are unwilling to make long-term investment decisions because they do not understand what the economic situation will be like in a few years. This is precisely why lowering interest rates alone does not guarantee a sharp increase in investment: businesses need more predictable conditions for planning.