Russia is seeking to spend its way out of its self\u002Dinflicted economic crisis, but the future is perilous for more investment. Read on.
Companies big and small spent to replace foreign equipment and software or channeled money into building new supply chains to reach alternative markets. Facing initial forecasts for a decline of up to 20 per cent in capital expenditure, Russia instead saw it increase six per cent in 2022, according to Bloomberg Economics.
“It appears that investment backed by the government and state corporations may increase further, but private sector investment is set to decline,” she said.The resilience last year was a matter of survival for companies that now needed to endure what the central bank calls a “structural transformation” of an economy besieged by sanctions. The Bank of Russia has said that the vast majority of businesses either boosted investment or kept it unchanged in 2022.
The disappearance of many imports has become one of the forces warping Russia’s wartime economy, driving growth based on less sophisticated technology toward what its central bank termed “reverse industrialization.” It was a similar rationale that prompted oil producers to spend on transport infrastructure and tankers. Seizing on a massive windfall from high commodity prices, the mining sector became the biggest driver of investment last year.
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