For the first time in decades, “Made in Russia” might have a chance to become again a global trademark.
As the weaker ruble created a price advantage for some industries, export volumes started to rise, in turn generating investment in certain sectors. The positive impact of the ruble collapse has been limited and uneven, as manufacturers still require additional investments. Uncertainty is having a real impact on economic decision-making and most likely in a negative way in terms of postponing decisions for consumption and investment. And we see globally that trade is recovering much slower than the overall economic growth, which makes it very difficult we think for Russia to become competitive as a manufacturing exporter without better investment climate. Economic policy uncertainty, arising from an unpredictable geopolitical situation and the ongoing sanctions, caused private investment to decline rapidly as capital costs rose and consumer demand evaporated.
Investment process seems to have started as investments in some sectors have already increased substantially, especially in the chemicals, rubber, plastics, electronics and machine-building industries. But on a more broaden level, Russia’s investors still lack confidence for broader investments and much will depend on progress on Russia’s overall structural reform agenda.
The recovery is only possible through investments aimed at upgrading the country’s capital base and which introduce new production technologies and innovation. If those structural changes are not fulfilled, there is not hope for economic recovery, no matter if the international sanctions are imposed further or cancelled. This is a critical job to be done by Russian government.