Sergey Tsukhlo, Head of Business Surveys Laboratory of the Gaidar Institute,  told “Nezavisimaya gazeta” that business optimism in the Russian industry has shown the biggest drop in the history of its estimates since 1993.

In March, Russian industry experienced not only a record drop in investment, but also an unprecedented drop in finished goods inventories. The consequences could have been worse if it wasn’t for experience in adapting to coronavirus restrictions. According to the Russian Ministry of Industry and Trade, the Russian industry needs up to six months to reconfigure logistics chains.

According to the government news announced on Sunday at its website, Prime Minister Mikhail Mishustin has signed an instruction to allocate Rb20 bn for granting loans to industrial enterprises engaged in products worth replacing foreign analogues. It is noted that funds from the government's reserves will be allocated to the Industry Development Fund, which will provide concessional loans to enterprises.

Industry went through a major turbulence in March amid unprecedented sanctions imposed by "unfriendly countries", ruble devaluation and a hike in the key interest rate to 20%. As a result of the first month of the conflict, business optimism of Russian industrial enterprises showed the most significant drop (by 27 p.p.) in the history of its estimates since 1993, says Sergey Tsukhlo. The investment plans of enterprises have also experienced an unprecedented decline.

According to the Gaidar Institute report, the industrial demand figure was comparable to the worst result of 2015. The output was supported by enterprises' intention to replenish finished product inventories, boosted by the experience of the 2020 coronavirus crisis, the ruble devaluation and a new spike in inflation. "In this situation, enterprises preferred not to curtail production, but to use Russian components which had not yet risen significantly in price as well as available imported ones. However, the result for domestic manufacturers seemed unsatisfactory: the industry remained short of stocks of finished products," Sergey Tsukhlo noted.