By Andrei Skvarsky.
The latest of monthly surveys by Deutsche Boerse-owned intelligence firm MNI suggests that the overall sentiment in Russia’s business community has remained stable and predominantly negative since October but continued to be slowly eroded by the weakening ruble and Western sanctions.
Business activity has on the whole been declining in Russia. Demand has been sliding, and production has hit the lowest point since December 2013.
Nor has the weaker ruble boosted exports, according to the findings of the survey, in which MNI’s division MNI Indicators interviewed executives in about 200 manufacturing, service, construction and agricultural companies.
“Inventories reached an all-time high, suggesting that companies were not scaling back fast enough in the face of weak demand,” MNI Indicators said in reporting the study.
Credit conditions have worsened and the likeliest reason was the central bank’s October 31 decision to sharply raise the key interest rate to 9.5%. Of the 15 criteria used in the survey, the availability of credit criterion showed the greatest decline.
“Business sentiment remained depressed in November with orders declining to a record low and firms reporting that the fall in the currency was hurting business even more,” said MNI Indicators chief economist Philip Uglow.
“The rouble appears to have stabilised following the central bank’s decision to float it freely. Prices, though, have yet to fully adjust to the new rate and so it is likely that we will see inflation accelerate over the coming months. This will further weigh down on business sentiment and economic growth in general.”
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