BOFIT Weekly Review 2016/49
Gas sector drives growth in fixed investment
Newly released Rosstat figures show a small recovery in seasonally adjusted fixed investment happened earlier than what the figures showed in late summer. The fresh figures suggest fixed investment returned to growth in the first half of this year. Fixed investment was up 0.3 % y-o-y in the third quarter.
Rosstat estimates that fixed investment of small firms and those operating in the grey economy continued to experience an unusually strong reduction in investment that began last year. In contrast, other fixed investment, which is mainly investment by large and mid-sized firms, experienced modest growth.
However, increase in fixed investment rests on a very narrow basis. In fact, all growth of total investment came from investment in producing and shipping liquefied natural gas (LNG) – an area where investment has multiplied this year. Observers note that this burst basically reflects massive investment on the Yamal gas production peninsula.
Fixed investment declined from last year for all other branches when taken together. Investment in oil production contracted significantly, and the steep decline in investment in the electricity sector and pipeline transmission capacity continued. In the manufacturing sector (excluding oil refining), fixed investment continued to slide, even if the drop was less steep than last year. The biggest drops in manufacturing investment were in the machinery, equipment and transport vehicles category. Investment in the chemicals industry continued to rise. The metallurgy branch returned to growth after three years of contraction.