Researcher at the Gaidar Institute’s International Best Practices Analysis Department, Kirill Chernovol commented for Forbes on the situation regarding the so-called “demographic crisis” in Russian business. In his assessment, the main problem today lies not in the mass closure of companies, but in a noticeable decline in the number of new registrations.
As the expert noted, statistics show a change in the structure of business closures. Whereas previously most liquidations were related to the removal of inactive companies from the Unified State Register of Legal Entities (EGRUL), reorganizations and voluntary cessation of operations under a simplified procedure now predominate. At the same time, the number of small and medium-sized enterprises continues to grow due to an increase in the number of sole proprietors, while the number of legal entities is declining. This may indicate a shift toward simpler and less costly organizational forms
According to Kirill Chernovol, several factors are influencing entrepreneurs’ decisions: weakening consumer demand, high borrowing costs, rising expenses, and deteriorating business expectations. Additional pressure is coming from a less favorable external economic environment and rising resource costs.
“Today, we are seeing a shortage of new companies rather than a wave of mass bankruptcies. Many entrepreneurs are not leaving the market but are changing their business structure, for example, transitioning from legal entities to sole proprietorships. However, if the decline in the number of registrations persists for a long time, the consequences could be more serious: it is young companies that create new jobs, foster competition, and drive innovation. “International experience shows that business activity usually recovers after a crisis ends, but with persistently weak demand and high interest rates, this process may prove to be quite slow,” noted Kirill Chernovol.