The assessment of the business environment by big business fell to a ten-year low

The Business Environment Index, measured by a survey of major companies, fell lower in March than during the 2014-2015 downturns and at the start of the pandemic. This is evidence of the beginning of a new crisis in the Russian economy,

The business environment index of the Russian Union of Industrialists and Entrepreneurs (RSPP) in March fell to its lowest value in ten years - it amounted to 32 points, falling by almost 15 units (minus 32%) compared to February, follows from the analytical materials of the business association, with which RBC got acquainted with. The new value of the index is the minimum for the entire period of its compilation according to the current methodology, the RSPP specified.

During the recession of 2014-2015, the indicator did not fall below 34.1 points. In April 2020, at the peak of the covid shock, the RSPP index fell to 34.3 points (minus 21% compared to the previous month).

"The results of a survey of companies - members of the RSPP indicate the beginning of a new crisis in the economy," the document says. The survey was conducted after the start of the military operation in Ukraine and the subsequent tough Western sanctions.

The RSPP index is based on a subjective assessment by business representatives of entrepreneurial activity and the economic situation in general; it does not use official macroeconomic statistics. The survey is conducted among all companies - members of the RSPP, it is attended mainly by representatives of large industrial businesses. The index is calculated as an assessment of the accumulated changes for the month on the scale "the situation has deteriorated greatly - has not changed - has greatly improved." The boundary value is 50 points (no change).

The index of personal assessments of the business climate by representatives of the RSPP (reflecting the subjective assessments of entrepreneurs) showed an even more radical decline: it fell by 34.1 points to 10.4. About 30% of respondents said that the situation had deteriorated significantly, 37.4% settled on a milder formulation "the state of the business climate worsened over the month." Just over a quarter of survey participants chose the answer “nothing has changed”, and only 4.4% of companies gave a positive rating.

The results of the RSPP survey differ from the estimates of business activity in the industry for March, published earlier by Rosstat, which recorded a decrease in business confidence in mining and processing - to plus 0.5% and minus 2.6%, respectively. At the same time, most organizations reported a favorable or satisfactory economic situation. RBC sent a request to the Ministry of Economic Development.

What negative factors does big business see

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The main changes recorded by RSPP representatives in March are as follows.

High inflation. 88% of respondents stated that purchase prices had increased, and two-thirds of the total number of respondents settled on the answer “prices have risen significantly over the month”. In response to market pressure, companies were forced to raise sales prices, the RSPP says. According to the latest data, at the end of March, annual inflation accelerated to 15.6%. Demand reduction. A fifth of the surveyed enterprises have fewer new orders. Prior to this, at least in 2021, the share of such a response did not exceed 15%. As a result, the "number of new orders" indicator lost 9.2 points compared to February. Difficulties in fulfilling contractual obligations.It has become more difficult for companies to meet the deadlines for order fulfillment - the value of the thematic indicator for March fell by 8 points compared to February. A third of survey participants reported that the number of overdue obligations from counterparties has increased. And almost 14% said that they had to additionally increase the terms of payments under the contracts of partners. Logistic problems. Business sharply worsened estimates of the average delivery time of products and the logistics sector as a whole - 42.6% of respondents reported negative dynamics. The corresponding indicators fell by 12.5 and 15.6 points. Deterioration of relations with foreign partners. This was reported by about 45% of the survey participants. Deterioration of relations with banks and financial institutions.A quarter of large businesses announced negative dynamics, while in the last reporting period less than 10% of companies were ready to agree with this. Negative situation in the currency and financial markets. Almost half of the survey participants noted that the state of the currency markets has changed for the worse, the vast majority of them chose a sharply negative answer. Approximately the same picture is relevant in the case of assessing the dynamics in the stock market. As a result, thematic indicators decreased by 24.6 and 19.3 points. Deterioration of the financial situation. More than a third of organizations reported negative trends in the financial condition of companies: most of them indicated that “the situation has worsened somewhat over the month.” But most firms still have a margin of safety, the RSPP points out.

The survey also showed a slight increase in the assessment of business relations with the authorities: the corresponding indicator rose by 1.7 points. But the majority of respondents (about 95%) do not see any changes in their relationship with the authorities, the document says.

The personnel policy of the companies has not changed much either. Organizations have become somewhat less likely to hire employees, however, in other parameters - the frequency of measures to reduce working hours, the proportion of organizations that decided to lay off part of the staff - there were no changes compared to February. Only a tenth of the firms surveyed resorted to such measures.

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