Expert: Investment activity in Russia remains low

Investment activity in Russia’s private sector remains at low levels, Olga Belenkaya, Head of Department of Financial Analysis and Economic Research at Alba Alliance Bank, said addressing the Fifth International Financial University Forum, How to Break into the Top Five of the Leading World Economies, on November 28. 

“Businessmen are fearing the lack of demand for their products and are skeptical about mechanisms for protecting the right of property and the judicial system, and fear for safety of the business”, the expert noted when speaking about the reasons for the low business activity.

According to Belenkaya, unless the government manages to boost the private sector’s investment activity, the tax and expenditure policy will be toughened.

“We are expecting the VAT growth next year. The government will start withdrawing resources from the private sector; these resources are becoming more effort-consuming and expensive for businesses”, Belenkaya added.

Boosting the small and medium businesses’ activity requires increasing information transparency, she said adding that it is necessary to create infrastructure projects.

“Such projects are there, but sadly, there are also great risks of non-market selection of such projects, which may prove inefficient. One of the examples is constructing the bridge on Sakhalin Island, a project that has evoked a wide public response, with some supporting it and others speaking of its ineffectiveness”, the economist said.

In conclusion, she expressed her opinion on the projects that are important for developing business environment, saying they should be a subject to discussion among experts.

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