A dramatic slump in capital investment by Russian companies in January pointed on Wednesday to Russia's ailing economy continuing to deteriorate fast.
There was no sign in data of a boost from preparations for the Sochi Olympics as investment fell by 7 percent compared with a year earlier, a huge undershoot compared with analysts' forecasts in a Reuters poll of a 0.5 percent rise.
"It's terrible. It's like in 2009," said Natalia Orlova, an economist at Alfa Bank, referring to the year when Russia's economy shrank by 8 percent as the global financial crunch wreaked havoc on corporate finances.
The unexpected plunge in investment last month comes after a year of stagnation. It fell by 0.3 percent in 2013, according to official estimates - a major factor behind lacklustre economic growth of 1.3 percent last year.
The investment malaise underscores the poor state of Russia's business climate and boosts the argument of those calling for structural reforms to diversify an economy that is too dependent on stagnant natural resource sectors.
The central bank lowered its mid-term economic growth forecasts on Tuesday, anticipating growth of below 2 percent until at least 2016, in an acknowledgement that Russia's economy will be sickly for some time.
The latest data comes after earlier bad omens, such as PMI data for manufacturing and services for January, which pointed to an economy that was practically stagnant last month, and coincides with turmoil on global financial markets as investors flee emerging market assets.
Alfa's Orlova said the slump in investment in January may be linked to the recent slide in the rouble, which has made it profitable for Russian companies to buy foreign currency instead of investing in production.
The rouble continued to plunge on Wednesday, shedding 0.8 percent against the dollar and hitting a record low against a dollar-euro basket used to gauge central bank interventions.
Other data released by the Federal Statistics Service on Wednesday also disappointed expectations, with retail sales rising by 2.4 percent, below analysts' forecasts.
Unemployment remained relatively low at 5.6 percent, however, which may help to maintain wages growth and consumption. Nominal wages rose 8.7 percent in January, with real wages up 2.5 percent.
Source: Reuters
There was no sign in data of a boost from preparations for the Sochi Olympics as investment fell by 7 percent compared with a year earlier, a huge undershoot compared with analysts' forecasts in a Reuters poll of a 0.5 percent rise.
"It's terrible. It's like in 2009," said Natalia Orlova, an economist at Alfa Bank, referring to the year when Russia's economy shrank by 8 percent as the global financial crunch wreaked havoc on corporate finances.
The unexpected plunge in investment last month comes after a year of stagnation. It fell by 0.3 percent in 2013, according to official estimates - a major factor behind lacklustre economic growth of 1.3 percent last year.
The investment malaise underscores the poor state of Russia's business climate and boosts the argument of those calling for structural reforms to diversify an economy that is too dependent on stagnant natural resource sectors.
The central bank lowered its mid-term economic growth forecasts on Tuesday, anticipating growth of below 2 percent until at least 2016, in an acknowledgement that Russia's economy will be sickly for some time.
The latest data comes after earlier bad omens, such as PMI data for manufacturing and services for January, which pointed to an economy that was practically stagnant last month, and coincides with turmoil on global financial markets as investors flee emerging market assets.
Alfa's Orlova said the slump in investment in January may be linked to the recent slide in the rouble, which has made it profitable for Russian companies to buy foreign currency instead of investing in production.
The rouble continued to plunge on Wednesday, shedding 0.8 percent against the dollar and hitting a record low against a dollar-euro basket used to gauge central bank interventions.
Other data released by the Federal Statistics Service on Wednesday also disappointed expectations, with retail sales rising by 2.4 percent, below analysts' forecasts.
Unemployment remained relatively low at 5.6 percent, however, which may help to maintain wages growth and consumption. Nominal wages rose 8.7 percent in January, with real wages up 2.5 percent.
Source: Reuters
