Russian Financial Execs Pessimistic on Economy: Poll

The number of financial executives working in Russia has reached the highest level since 2015, with financiers questioned by Deloitte saying that businesses would be most negatively affected by a recent VAT hike and Western sanctions, RBC reports.

The poll conducted by Deloitte involved 80 financial executives, 55% of whom work in Russian companies and 45% work for foreign companies that have localized businesses.

The number of pessimistic financial execs has nearly quadrupled to 37% in the past six months, with this growth being an all-time record.

Russian companies are usually more pessimistic than foreign ones working in Russia. Telecommunications, media and technological firms are more inclined to optimism, as well as companies with revenues ranging from 5 billion to 25 billion rubles ($76.2 million to $381 million).

The seemingly insignificant VAT growth of two percentage points has turned out to be a serious negative factor for businesses, says one of the researchers, Dmitry Kasatkin, who is Senior Specialist at the Deloitte CIS Research Center. All companies expect a surge in the inflation rate, while rising prices and declining demand cannot make anyone optimistic, Chief economist at BCS Global Markets Vladimir Tikhomirov noted.

As for the significant rise in the number of pessimistic financial executives from the production sector, it mostly stems from the sanctions imposed on Oleg Deripaska’s Rusal in April. The move came as a shock to Russian industrial companies and now they don’t rule out that even non-governmental companies may face restrictions as new western sanctions are under consideration. “Exporting companies realize they are the first in line to be blacklisted,” the expert said.

Another reason for the growing pessimism and uncertainty, particularly among steel and oil companies, is the global economic situation and trade wars between the United States and China, which have been getting tougher.

“Everyone fears that it will lead to a significant decline in demand in the global economy and affect the financial performance of companies,” Tikhomirov explained.