The MNI Russia Business Indicator declined 3.1 points to 51.5 in August from 54.6 in July as the imposition of tougher sanctions by the EU and US hit companies’ access to credit.
The survey revealed pressure on firms’ finances increased considerably in August as new sanctions reduced the ability of firms to raise finance abroad. The Financial Position and the Availability of Credit Indicators hit record lows in August, with the latter falling below the 50 expansion/contraction line for the first time in 16 months.
In July, we suggested that companies’ concerns surrounding sanctions had begun to fade, but warned that the downing of a Malaysia Airlines flight and the imposition of sectoral sanctions by the EU could see sentiment hurt again, and that’s exactly what the August data revealed.
The new Tier 3 sanctions have also hit Russian exporters with Export Orders falling back into contraction to the lowest since May, having hit a five month high in July.
While output managed to hold up, albeit at a reasonably low level, a fall in New Orders to the lowest since December 2013 suggests this could beshort-lived.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “This was the first survey following the downing of Malaysia Airlines flight MH17 and the imposition of new sectoral sanctions from the EU, the combination of which had a clear negative impact on sentiment. The reduced ability of firms to raise finance in the EU and US have shown up quickly in our data with firms’ reporting that credit availability worsened markedly over the past month.”
