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Small business sales fall

The RSBI index in August fell to 54.7 points and reached its lowest point since the beginning of the year. For the second month in a row, small and medium-sized business segments recorded a decrease in sales amid changes in the Russian economy.

According to analysts, in August 2024, part of the components of the Index decreased, which was the result of a further slowdown in the business activity of companies in the SME sector. For the first time in six months, Sales Component began to fall due to a decrease in actual sales figures and pessimistic expectations of entrepreneurs for the next few months.

The Personnel component was the only one that showed dynamics: the business still needs personnel. The Loans component decreased in August in the context of a high key rate, even with a sufficient level of financing availability for business, based on the share of approved loan applications. The Investments component is at a minimum since the end of 2022, which is also due to the current monetary policy.

Companies in the SME sector are experiencing difficulties with sales growth, which indicates a further slowdown in the economy, Artem Deev, head of the analytical department at AMarkets, explains.

Entrepreneurs fear a reduction in sales in the future, which leads to a decrease in investment and a decrease in demand for loans. Despite the sufficient availability of lending, the high key rate makes loans more expensive, which discourages entrepreneurs from borrowing money, the expert emphasizes.

“So far, the situation is not expected to turn sharply for the better. The slowdown in the economy is expected to continue, and this is due to the continued pressure on sales, –  Artem Deev notes. – The key rate is still high, which does not stimulate investment activity. If the Central Bank lowers the rate, this may have a positive effect on business activity and lending growth.”

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