Government fixed investment soars in Russia as corporate fixed investment remains weak

Rosstat reports that fixed investment rose in real terms as much as by 4 % y-o-y in the second quarter even with Russia’s invasion of Ukraine.

However, the second-quarter fixed investment was largely driven by increased state budget spending by federal, regional and municipal governments. At the same time, there was a pull-back in corporate fixed investment. When Russia’s high inflation in investment goods and services is taken into account, there was no real growth in corporate fixed investment. The dearth of corporate fixed investment reflects the very bleak future prospects facing many companies. On top of the recent developments, Russia’s fixed investment trend has been really weak for many years.

Fixed investments in Russia have been weak for very many years

Sources: Rosstat and BOFIT.