Russian business confidence ended the year at a record low with the MNI Russia Business Indicator falling to 45.5 in December from 51.5 in November, the first fall below 50 since the series began in March.
Both Production and New Orders also hit their lowest level on record, in a year which has seen GDP growth slow to the weakest in four years and inflation rise sharply.
While companies were slightly less pessimistic about the next three months compared with November, the overall weakness of the survey points to a further weakening in growth.
President Putin has finally acknowledged that Russia’s problems are mainly domestic as opposed to external. The authorities, however, have yet to deliver a credible blueprint on how they intend to lift the economy out of stagflation and tackle the long list of supply side issues the economy faces.
The Employment Indicator, which measures the amount of labour demand from businesses, increased slightly in December, having hit the lowest on record in November but remained at a low level.
Commenting on the latest survey, MNI Indicators Chief Economist Philip Uglow said, “The December survey is a miserable end to what has been a terrible year for the Russian economy. Confidence among some of Russia’s largest companies hit a new low as both output and orders fell.”
“Officials seem to realise the hole that Russia is in, although it will be a difficult job to dig themselves out. While the central bank may find room to cut interest rates next year, the government needs to urgently take action to change the growth model,” he added.
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