SERGEI TSULHLO: “RUSSIAN INDUSTRY HAS ENTERED A NEW GROWTH CYCLE”

Sergei Tsukhlo, Head of the Business Surveys Department of the Gaidar Institute shared with the Kommersant daily the findings of the study into the industrial business climate in February. The data of the online monitoring of the Russian industry point to the improvement in the main indices and recovery of companies’ optimism.

Recovery is underway now after the partial mobilization declared last September when the optimism of the Gaidar Institute’s respondents lost four points. By February 16, the relevant index of the Gaidar Institute rose by seven points and attained its 12-month high.

As follows fr om the study, the industry’s optimism growth has taken place on the back of higher demand which, by enterprises’ estimates, attained better index values year on year in January-February 2023 and even surpassed the levels seen in 2018-2019. As a result, companies’ satisfaction with the achieved sales volumes has increased, while the share of normal estimates of the current volumes of demand has become record high (66%) since the beginning of the military operation in Ukraine. However, such a high level of satisfaction with demand was registered in September 2022. Most likely, a surge in demand is related to an increase in military orders on the part of the government.

According to the IEP’s data, despite growth recovery, output plans fell by 4 points after a record-high spike in January (see chart). “It seems the industry has made up its mind to adjust its plans a little, but not down to crisis-related pessimism. The indicator’s positive balance which has been consistently registered by surveys since August 2022 shows that enterprises are still prepared to switch over from near-zero growth to marked output growth,” Sergei Tsukhlo notes.

However, in practice the industry fails to implement high optimism of output plans. The February data register again the balance of actual changes in production at around zero, that is, the level wh ere it has remained since September 2022.