BOFIT Weekly Review 2015/14
Investment in Russia declines; structure of branches targeted for investment continues to shift
Fixed capital investments in Russia fell nearly 3 % last year. The on-year change decayed further in January and February to over 6 %. A deepening of the decline is in line with several forecasts for the entire year.
After a year-long break, investment in oil and gas production increased last year by over 10 %. Investments in oil refining, where boosting production and exports has been emphasised in recent years, rose mildly after several boom years. Investment in energy pipelines began to climb again after falling sharply in 2012 and 2013 on the completion of several major oil and gas pipeline projects.
Growth of investment in manufacturing came to a halt. Excluding oil refining, which accounts for nearly a quarter of all manufacturing investment, manufacturing investment contracted slightly. Investment in the electricity sector continued to decline. Investment in rail transport shrank by about a fifth.
The share of the energy sector and oil refining in total investment recovered to 2010–2012 levels of 30 %. Manufacturing (excluding oil refining) held on to a share of just over 11 %. Investment in the real estate and construction sectors rose to 17 %, while the share of investment in road and rail branches fell below 10 %.
Looking at the breakdown of investment by category, growth of investment in machinery, equipment and transport vehicles – which is essential for economic growth potential – fell 7 % in nominal terms in 2014 (information is only available on value of investment). It was the first time such a decline occurred since the 2009 recession. Investment in housing grew substantially, while investment in other types of construction remained unchanged from the previous two years in nominal terms.
Investment volumes for select core branches, 2009=100
Source: Rosstat