Russian business has returned to sentiments the days of oil at $100


The well-being of Russian business in may of 2016 has improved dramatically and returned to the level of three years ago, when the economy grew and oil cost $100 per barrel, it follows from the last monthly data, MNI Indicators (included in Deutsche Boerse). The index of business sentiment MNI Russia Business Sentiment this month jumped by 11 points (+21,7%), to the level of 61.8, the highest since may 2013, according to a review MNI. The official statistical data is not so optimistic, but also talk about an impending reversal of the economy. The Department of studies and forecasting of the Central Bank believes that the Russian economy has passed the lowest point of recession and is close to the beginning of the recovery growth. The Minister of economic development Alexei Ulyukayev said today that GDP growth will go to zero after a recession by mid-summer.

The index of business sentiment MNI based on a survey of top managers of 200 companies listed on the Moscow stock exchange. Since the beginning of year the indicator has risen by almost 50%, pointing to “the increasing business confidence as the economy begins to recover,” the report says MNI. For the first time from October 2015 firms, looking with optimism on the business environment in the coming three months, was more than pessimists. The survey participants in may also reported improved access to credit and improve their financial situation — both of the corresponding indicator rose to highs in 2014, said MNI.

MNI does not have a very large sample — a total of 200 companies, said the Director of the center for market research HSE George Ostapkovich. For comparison, the HSE in similar studies polled up to 20 thousand companies. “According to our data, seen some stabilization, at least for now us employers are responsible that the economic situation is much better than it was last year. Some of the output for significant growth there. But the fact that the situation is improving — it is unique,” says Ostapkovich.

Analysts of the Bank of Russia wrote yesterday that they expect “out of the economy on a trajectory of slow growth in the coming months in the absence of new external shocks”. The signs of economic recovery can occur in the second quarter of this year, but growth will be small — between 0.2% to the previous quarter (after declining by 0.1% in the first quarter), says the Bulletin of the Department of studies and forecasting of the Central Bank. GDP growth is improving due to the industries associated with domestic demand such as wholesale and retail trade. “Statistics show that trade and consumer spending gradually emerge from the peak, though still low,” — said in the review of the Central Bank.

According to the Ministry of economic development, April GDP declined by 0.7% yoy after falling by 1.2% in the first quarter. “We hope that somewhere in the middle of the year we will reach the zero level, gradually going to restore positive economic growth,” Ulyukayev said on Tuesday (quoted by the Agency “Prime”).

The economy leaves the recession, I agree Ostapkovich. But this stabilization at a low level “entrepreneurs have adapted to this whole situation, to new prices, new costs, new currency turbulence”. “In the end, even if the regulators, even if the government won’t do it themselves, entrepreneurs will find the point of equilibrium — and, it seems, they find them. But this equilibrium at a low level, it is much lower than we had in the fat years, 2003-2007,” says Ostapkovich.

MNI in his review notes that the cumulative impact of improving state firms and increasing demand may lead to “increased activity in the employment of workers in the coming months”. In addition, the Agency writes that the mood of the business positively affects the stabilization of the ruble. After the dollar in January reached a record high against the ruble (RUB 82,45 for $1), the rate recovered and stabilized near 65 RUB This occurred against the background of rising oil prices, which 26 may have exceeded $50 per barrel for the first time in seven months. For entrepreneurs and business stability of the ruble is one of the main positive production of growth factors, the majority of enterprises in the domestic manufacturing industry are importers of machinery, raw materials and materials, so their leaders in order to reduce costs are extremely interested in further strengthening of the ruble, according to a may survey by HSE’s economic situation for Russian industrial enterprises.