The level of optimism in the Russian industry rose to a 12-month high, noted Sergey Tsukhlo, Head of Business Surveys Department at the Gaidar Institute, in a regular survey of the industrial sector.

On March 2, Sergey Tsukhlo presented a report on the results of the "sanctions war" year for industry at a seminar at the MSU Moscow School of Economics, which the RBC reviewed. As surveys of CEOs showed, a year after the start of the special operation in Ukraine and harsh Western sanctions, Russian industry feels generally positive: the index of industrial optimism and demand expectations are at their highest in 12 months.

The results of 12 months of the "sanctions war" do not look as tragic as initially expected by all its stakeholders, said Sergey Tsukhlo. According to the surveys of enterprises, the Russian industry completed the year after the sanctions began with the best demand dynamics for this period, stability of its forecasts, as well as demonstrating a good level of satisfaction with sales.

The IEP considers the dynamics of demand as the balance of actual changes in demand, cleared of seasonality, which is calculated as the difference between the share of companies, indicating growth in demand, and the share of companies indicating a decline in demand. At present the index is approximately at the level of zero (it was in the positive in 2021 and till February 2022, during the period of the post-COVID economic recovery). In February 2023, the index was the highest since the beginning of the special operation and its value even exceeded the level of non-crisis 2018-2019, Tsukhlo pointed out.

The indicator reflecting the level of satisfaction with the achieved sales also keeps rather high. In February, the share of normal (i.e., satisfying) estimates of the current quantity of demand was 61%, corresponding or even exceeding the level of “quiet” years.

Another group of output indicators also reflects the optimistic mood of industrialists. The index of actual changes showed that in February the output was slightly less than in January, though this indicator has been stable since September: it does not drop too much, but it does not grow noticeably either. However, the index of plans is steadily keeping in the plus after September, “signaling to all interested parties the high and absolutely non-crisis desire of enterprises to demonstrate that very "industrial growth," says the Gaidar Institute review.

As Sergey Tsukhlo explained during the presentation of his report, the February estimates of businesses have not had time to reflect the January record budget deficit of Rb1.8 trillion and the subsequent weakening of the ruble (in February, it lost about 6% to the dollar for the month, or about Rb4.5). According to the expert, these factors may find their reflection in the spring surveys.

Enterprises still fail to ensure statistically discernible production growth even with the high optimism of its plans, Tsukhlo admitted. However, plans’ implementation is also hindered by the “uncertainty of the current situation and its prospects” and this risk has been mentioned by most enterprises during the last four quarters.

“Growth in costs, lack of alternative suppliers and manufacturers in Russia, and a significant change in process chains due to the inability to replace imported components have become the most massive sanctions’ consequences for the Russian industry,” the expert concluded.