MOSCOW, December 30, Nadezhda Sarapina. Contrary to gloomy Western forecasts, the outgoing year has been quite successful for Russia. The Ministry of Economic Development estimated GDP growth at 3.5 percent. The President called the economy healthy, noting the success of domestic production, as well as the strengthening of international ties. Enterprise profits increased by 24 percent, with the non-financial sector earning many times more. The results of 2023 are in the material.
We won back the fall
The country managed not only to compensate for the losses of 2022, but also to step forward. GDP is now greater than before the Western sanctions attack. Moreover, as Putin emphasized, mining accounted for only two percent of GDP growth, and the largest contribution — 54 percent — was made by non-resource sectors.
“The main achievement is the increase in industrial production volumes under conditions of tough sanctions,” notes industrial expert Leonid Khazanov. According to Rosstat, for ten months — 3.5 percent compared to the same period in 2022. The expert cites ferrous metallurgy as an example: 74 million tons of steel were produced, and last year — 71. This was facilitated by the growth in the production of cars, freight and passenger cars, the stable situation in housing construction, as well as the reorientation of exports of metallurgical enterprises from Europe to Asia and Africa .
Over the nine months of the outgoing year, the profits of large and medium-sized companies in the real sector exceeded 26 trillion rubles and exceeded last year by a quarter. Enterprises managed not only to retain staff, but also to invest: in the second quarter, investments in fixed capital increased by 12.6 percent, in the third — by 13.3. And they achieved a high level of autonomy. “More than half of investments in the real sector are made from the own funds (profits) of Russian enterprises. In second place are bank loans, in third place are funds from the federal budget,” emphasizes economist, BitRiver Communications Director Andrei Loboda.
Rely on yourself
Raising funds into the economy is an extremely important task. “Over 30 years, about 1.3 trillion dollars were withdrawn from Russia. These assets would be quite enough for long-term investments,” says Loboda.
Due to sanctions and geopolitical risks, there is almost no Western capital left. Experts estimate its share at only half a percent. And the development of enterprises requires funds. “In the context of the departure of European and American banks from Russia and the closure of the Western financial market, it was domestic sources of investment that provided support to the real sector,” Khazanov points out. Financial results confirmed the viability and effectiveness of self-sufficiency. Analysts note an increase in activity on the Moscow Exchange.
“The main achievement in the financial sector this year was the growth of the stock market. Blue chips, including shares of the banking sector, recovered from the recession and led the rest of the companies. The number of Russians with brokerage accounts reached 21 million, this is more than 16 percent of the population «, adds Loboda.
The government is introducing investment insurance programs and developing new investment instruments. As a result, citizens receive acceptable returns with minimal risks and are more willing to enter the stock market.
Growth point
The import substitution program also performed well. Over the course of a year and a half, the number of companies in the light industry increased by 80 percent, furniture manufacturers by 30, children's toys by 20. The number of trademarks increased by a third. Doing business in the country turned out to be profitable.
At the same time, the state keeps the market open. “Russia does not expel anyone and does not close itself off from anyone, from anyone. Many foreign enterprises and organizations, despite the pressure of their governments, their officials, said that they want to continue working in our country. We only welcome this,” he said Putin. Some corporations simply changed their names, others were transferred to management with the right to buy back. And the number of foreign companies, oddly enough, has grown — from 24.1 thousand in March 2022 to 25.6 thousand.
Expanding contacts with countries in Asia, the Middle East, Latin America, and Africa helped. Thus, trade with China exceeded the target ($200 billion) by almost ten percent, trade with Saudi Arabia increased by 20 percent in seven months, with the UAE by half in nine months, with India by 20 percent in eight months.
“While the EU countries are demonstrating near-zero economic growth and a serious decline in industry, Russia is showing the strongest breakthrough under the conditions of Western sanctions pressure,” sums up Guzel Protsenko, CEO of Alfa-Forex. Stimulating fiscal policy and effective budget execution laid the basis for the restoration of the ruble's position. The final deficit is about a billion rubles, only half a percent of GDP. The World Bank included Russia in the top 5 economies in the world along with China, the USA, India and Japan.