Economics and Investment

Half a year has passed, and we decided to sum up these 6 months. We bring to your notice a short overview of the financial market.

Станислав Скакун, директор по экономике и финансам Интеркомп
Stanislav Skakun
Head of Finance
The Russian economy has shown growth and continues to recover for the first time since 2014. Charges to the budget from taxpayers of all levels increased by 40%. The state's foreign exchange reserves, including the Central Bank's reserves and the funds of the Ministry of Finance, reached $ 412 billion.

Last year, the number of foreign investment projects in Russia increased up to 205, this is the highest result since 2005, RBTH reported.

Western Europe (especially Germany) and the United States, which implemented 98 projects in the territory of the Russian Federation, are the most proactive investors in the Russian economy. The Middle Eastern and Asian investors, whose investments for 2017 could grow by more than 20% compared to 2016, have a huge potential in Russia.

They most actively invested in projects related to sales development and marketing (almost half of all investments). The second and third places are taken by production and logistics. Investors note that the processes of interaction with the Russian partners and government bodies become more transparent, excessive control over business decreases.

The following difficulties are still faced by the foreign investors: there is a lack of qualified personnel, administrative barriers hamper the rapid growth, prices are growing.

According to the estimates of the Bank of Russia, the annual growth rate of investments in fixed assets in Q2 2017 will be 3-5% compared to 2.3% in a previous quarter. Industrial production and the amount of construction works actively increased. The retail trade turnover in April and May 2017 exceeded the values of similar periods of the previous year.

In the opinion of Stanislav Skakun, Head of Finance at Intercomp, the restoration of the Russian economy is not unexpected for companies and experts closely following the economic cycle in Russia; signs of recovery have been already observed in Q4 2016. However a rapid recovery to pre-crisis indicators should not be expected. This will take time, stabilization of the external economic background, and significant changes in the mechanisms of economic regulation.

Challenges for business

The main trends and risks include tightening of tax control, new rules of control over personal income, new attitudes in the bank control, focus on final de-offshorization.

According to the results of the survey conducted by the Russian Union of Industrialists and Entrepreneurs in 2016, the entrepreneurial activities in Russia are hampered by three problems: reduced demand, lack of qualified personnel, growth of prices and tariffs.

The fall in oil prices and the strengthening of the rouble in the first half of the year affected the oil and gas revenues of the federal budget. According to the operational assessment of the Ministry of Finance, revenues from taxes on hydrocarbons extraction and export fell by 3.6% in June compared to May and by 11% compared to the average level in Q1. To cover the falling incomes, the government increased the fees from the non-oil and gas sector of the economy, according to the data of the Ministry of Finance. In June, the amount of revenues increased by 40%, and hit record high (841 billion roubles) since the beginning of the year.

The oil prices in roubles for 1 barrel of BRENT in 1H 2017

Source: TradingView platform