Experts first noticed a year deterioration in sentiment in industry

Business climate in industry by the end of February 2016 has deteriorated for the first time since March of last year experts of the Higher school of Economics (HSE) recorded a decrease of its main indicator — the index of business confidence (ISP). Compared with January 2016 year, it fell by 1 percentage point (PPT), down to the level of -5%.

“The ISP industry in General has worsened in monthly comparison for the first time in the last 11 months, with the main negative driver was the component that characterizes the production business expectations for the next three or four months. This is quite alarming because forecasts usually psychologically very weakly dependent on seasonal fluctuations,” — said in the report Economics.

The main reason for the fall of the expectations of Industrialists HSE experts named this factor as “uncertainty of the economic situation in the country”. In February 2016 at the lack of confidence in the future was complaining about 51% of participants in the study of Economics, while two years earlier a serious problem is “uncertainty” was mentioned by less than one-third (31%) of respondents. Compared with February of 2015, the number of those who are most afraid of “uncertainty” in the economy, grew by 16 PPT

This “haloproxy growth” in Economics is perceived with great concern, noting that “uncertainty factor” dramatically reduces investment and modernization activity of entrepreneurs, especially from the private business.

“Private entrepreneur risks not only the job loss, but also loss of their capital invested in the business. In a period of uncertainty, private businesses are seeking to evade risks, not to make long-term investments, to limit employment and investment in renewal of fixed assets, as well as narrow the horizons for strategic planning of their enterprises to a maximum of one year”, — stated in the report of the HSE.

Among the negative consequences of “uncertainty” in HSE related has been ongoing for about one and a half years, the decline in employment in large and medium-sized industrial enterprises. This emphasizes that in the end of 2015 the process of downsizing “a few have intensified.”

The second threat to the Russian industry participants in the study the HSE has identified the demand for products within the country on this issue complained about 48% of the respondents.

“In the most difficult position on practically all major indicators of industrial activity of the enterprise and are accordingly industry that focus on final demand of the population and depend on a high share of intermediate import to production of their products”, — stated in the report of the HSE.

Experts recognize that projections in the first two months of the year is difficult to do, because in this period, particularly large impact of the seasonal factor (the”celebratory component” of January, February short, the delay of the financing of state enterprises, etc.). At the same time, the HSE report highlights that “without a fundamental improvement of business and investment climate, especially in the segment of private business”, the industry will finish the current year in the “zone of unfavorable business climate”.

“If to speak about prospects of development of the industry until the end of 2016, with regret, we can assume that the final index of physical volume of industry overall will remain as in 2015, in the negative zone. However, the annual rate of decline in the current year may be lower,” warns the Director of the Center for market research of Institute for statistical studies and Economics of knowledge HSE George ostapkovich.

Previously, the HSE has warned that Russia’s economy continues to “twist in a spiral of recession” and growth will resume not earlier than 2017.