Small business growth slows down in Russia

The SME segment in Russia is close to stagnation. According to a study by Promsvyazbank, Opora Russia SME association and Magram Market Research agency, the RSBI index of small enterprises dropped to 50.9 points in the third quarter of 2019.

In the first and second quarters, the index of business activity of small businesses was higher, at 52 points. According to experts, the drop in the third quarter indicates a halt in business activity. Worst of all is the state of SMEs in the manufacturing sector; on the contrary, in the services sector, there has been a slight increase, RBC reports.

Representatives of small businesses say that it is easier to take loans, but boosting turnover becomes a problem, so revenue gradually declines. Analysts say the VAT hike at the beginning of this year dealt a powerful blow to small businesses. Big businesses began to cut costs, and it hit small enterprises that deliver some services for big business.

Experts say the contribution of small and medium-sized businesses to the country’s GDP has declined significantly in recent years. According to the Federal State Statistics Service, Rosstat, SMEs accounted for 21.9% of GDP in 2017. Small businesses’ contribution is usually at least twice that amount in developed economies.

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