SERGEY TSUKHLO: “LACK OF OWN FUNDS IS THE ESSENTIAL OBSTACLE TO INVESTMENT ACTIVITY OF INDUSTRIAL ENTERPRISES”

“Nezavisimaya gazeta” published a monitoring of investment activity of industrial enterprises prepared by Sergey Tsukhlo, Head of Business Surveys Department at the Gaidar Institute.

According to the survey, industrial enterprises have recovered of investment pessimism for the first time since the March 2022 collapse. However, it is still too early to bear evidence of shaping confident investment optimism. According to the survey, the excess of responses implying that investment will grow over the responses that it will decline is tiny, i.e., only 2 p.p.

The major obstacle to investment activity, according to enterprises, were high prices for equipment and construction works in 2023. This factor was mentioned by 50% of enterprises, “more than ever since 1996.” This factor almost shares the first place with “lack of own funds”: this was reported by 48% of enterprises. “However, reference to this obstacle is now near historic lows," specified the author of the survey Sergey Tsukhlo.

Businesses put “uncertainty in the speedy revival of the Russian economy” in the third place (38% of votes). “This was also the maximum reference of the said factor,” Tsukhlo noted.

For comparison, suppose that credit challenges hinder investment activity because of difficulties in obtaining loans only for 18% of enterprises and for 16% due to high rates. This means, apparently, that this factor is important, but now, it seems that it is not dominating.

According to the Ministry of Finance, one of the main sources of investment is the business's own funds. Although now they also started mentioning such a source as foreign capital, i.e., friendly, unfriendly, Russian capital moved abroad. The easing, that is, the possibility of an emergency “evacuation” of capital in exchange for new investments is under consideration.