By Andrei Skvarsky.
A survey by a Deutsche Börse-owned research firm suggests the international fallout from Russia’s annexation of Crimea has brought a lot of pessimism to the Russian business community.
With the looming threat of tough anti-Russian sanctions, business confidence among Russian companies has dropped in March to its lowest level in three months, according to MNI Russia Business Sentiment, a monthly poll of Russian executives by Deutsche Börse subsidiary MNI Indicators.
A rise in optimism among Russian businesses at the start of the year triggered by the upcoming Sochi Olympics was unwound after Crimea broke away from Ukraine and joined Russia, MNI Indicators said.
At the beginning of 2014, Russian companies saw the depreciation of the ruble as an increasingly positive factor for their business. However, in March fewer companies felt it was a help, MNI Indicators said, arguing that the speed of the Russian currency’s decline was most likely construed as a sign of economic instability.
“Russia’s actions in Crimea put a significant dent in business confidence in March as concerns grew over the impact on their companies and the wider economy. Businesses dislike uncertainty and our survey shows that companies are feeling the effect of the tension in the region,” a statement from MNI Indicators quoted its chief economist, Philip Uglow, as saying.
“Russia is paying the economic price for its annexation of Crimea. Growth was already extremely weak, with Russia badly needing to change its growth model and rebalance the economy away from consumption to investment. With capital flowing out of the country they’ve made that job an awful lot harder,” Uglow said.