What projections can be trusted and what investments can be made in Russia?

World Bank experts have noted in their latest review of the Russian economy that the current long period of recession will be followed in 2017-2018 by a recovery of basic economic and financial trends and indicators. Although conservatively positive projections have started to emerge (please see our partner CEEMA Business Group review Trump, Ruble, Oil Prices and Russia’s Economic Outlook), experts do not anticipate a radical turn towards a more diversified economy.

Ilya Panteleev
General Director Russia and CIS
What projections can be trusted and in what companies operating in Russia can invest? We asked this question to Intercomp CEO Ilya Panteleev:

Making economic projections (as well as giving advice) is a thankless occupation as we live in a very unpredictable environment and expert forecasts do not hold up although, of course, everything is explained quite accurately in retrospect. In such an environment, any business decision should be made considering not only usual highly probable risks, but also unlikely events that can give rise to great loss. In times of crisis, such events occur more frequently and can result in dire consequences.

It is, in particular, worth noting investment policies put in place by companies. When financial resources “shrink”, the temptation to reduce investments in all areas is great. Although such solution “superficially” seems fair (“either all or nothing for all”), it is in fact erroneous because companies are not social institutions, and any investment made today will fuel growth in the future. It is therefore necessary to select key areas for business development – those that already bear money and projects and will generate more in the future – and continue investing in them. So to improve performance in times of scarcity, all other areas should be kept on reasonable “dry rations” or, especially in case of supporting processes, be outsourced.

The winning companies in competitive markets are those that are able to adapt quickly to external changes. Cost and risk management needs to be even quicker in times of crisis. In outsourcing processes, companies are able to regulate their costs with more flexibility. Fewer operations mean lower costs, and if business grows, it is then possible to invest even more in operations. A static picture becomes dynamic and well-adjusted to external conditions thanks to outsourcing which provides what is necessary for freedom and flexibility.