By Andrei Skvarsky.
Deutsche Boerse-owned research company MNI Indicators argues, citing a survey of Russian companies, that the business environment in Russia improved considerably in May and that the current Russian economic crisis is past its worst.
Russian companies had increased their output and were receiving more orders, the London-based research firm said in a statement, citing the latest of its monthly surveys involving interviews with executives at manufacturing, service, construction and agricultural companies.
Loans became easier to obtain in May, nearly a year after Ukraine-related sanctions imposed on Russia by the European Union and United States drastically limited access to Western capital markets for Russian companies.
The MNI Russia Business Sentiment Indicator, a monthly index based on the surveys, suggests that Russian companies were predominantly, albeit moderately, optimistic in May. The preceding eight months had seen increasing pessimism and scepticism, according to the indicator’s readings.
MNI Indicators questions about 200 companies listed on Moscow Exchange in each of the surveys, which were launched in March 2013.
“Inflationary pressures continued to ease as the rouble appreciated further, with lower input costs enabling more companies to keep the prices of their own goods and services in check,” MNI Indicators said, attributing the perceived improvement of the business situation to rate cuts by the central bank and the partial recovery of the rouble after the currency depreciated by about 70% last year.
“It is looking increasingly likely that February marked the low point for Russian businesses with sentiment, output and orders all pushing back above 50 in May. A weakening in inflationary pressures and an improvement in credit conditions should help businesses over the coming months,” the statement quoted MNI Indicators chief economist Philip Uglow as saying.
“Even though official inflation remains high, the continued weakness in the economy and the appreciation of the rouble provide room for the central bank to cut rates further, making a sizeable reduction in the key rate justified at the next meeting of the central bank on June 15.”
The upbeat returns of the survey appear to contrast with the views of former Russian finance minister Alexei Kudrin, who remains active in Russia’s financial affairs and who told reporters at the end of May that the Russian economy is “deteriorating” and will keep doing so for months ahead.