Half of Russian businesses positive about financial prospects

Half of Russian businesses positive about financial prospects
Photo: Dinozaurus

The number of business representatives that are optimistic about the development of their companies in Russia has increased compared to the beginning of the year. Small and middle-sized enterprises are most positive about their future. Declining foreign and domestic demand, increased protectionism and cyberthreats were named as obstacles to business development in Russia.

Over half of Russian companies believe business prospects will soon improve, says UrduPoint citing a study conducted by Deloitte global accountancy. The survey held in September and October 2019 was based on interviews with financial directors of leading Russian companies, who were asked to evaluate business prospects regarding the development of their companies in the local market. According to the study, 51% of the respondents expect positive changes in companies’ financial prospects in the near future.

“Today, most business representatives expect optimistic changes in the current financial situation of their company, which contrasts with the high number of neutral assessments in the first half of 2019,” reads the report. The change indicates that companies have dealt with many difficulties and are now focused on positive improvements, believe the study’s authors.

Russian banks are rather pessimistic about their business prospects: 36% of the respondents expect negative changes in the coming months. Photo: Dgeise

Small and middle-sized enterprises (firms with revenues below $31,4 million) expressed the most positive attitude, with 73% of the respondents expecting business prospects to improve, followed by Russia’s largest businesses (companies with annual revenues exceeding $784 million). In this group, 56% of the respondents believe that the financial situation will improve in the near future. By sectors, transport and pharmaceutical companies have the most positive outlook: more than 60% of the respondents expect their business to improve. Banks are the most pessimistic with 36% of the respondents expecting negative changes in the coming months.

Overall, the respondents are expecting an increase in operating costs, but also a higher income and operating profits growth rate accompanied by a general decrease in capital cost growth. Decreasing levels of risk and uncertainty were named as key factors reinforcing the companies’ positive outlook, while a decrease in foreign and domestic demand, increased protectionism and cyberthreats had a significant negative impact on business development in Russia.

In November, the International Monetary Fund predicted that Russia’s GDP growth would pick up in 2020 reaching 1,9%. The World Bank expects the indicator to total 1,6% next year and 1,8% in 2021 with regard to national projects, which are expected to contribute about 0,2-0,3% to the country’s growth.

By Anna Litvina