BOFIT Viikkokatsaus / BOFIT Weekly 2017/10

Rosstat reports that the recovery in seasonally adjusted total fixed investment continued in the fourth quarter of 2016. As for the year in its entirety, 4Q16 investment was down about 1 % from 2015. The slide was notably less than Rosstat's earlier figures suggested for the previous quarters of 2016. However, last year fixed investment was down by 11 % from 2014, because Rosstat's revised figures deepened the drop in investment in 2015.

About a quarter of total investment comes from small firms and the grey economy. Rosstat figures mean that such investment remained at about the same level in 2016 as in the previous year. During the current recession, these investments only contracted in 2015, when they fell several per cent. Other fixed investments, which are mostly investments of large and mid-sized companies, shrank by about 1 % last year. However, the slide in such investments in the previous three years was steep (down 10 % in 2015 alone), so their level last year was several per cent below that of the 2009 recession.

Investments of large and mid-sized companies saw a strong increase last year in investment in oil & gas production. It was the third year in a row of investment growth in that sector. Last year's growth, however, came from an investment boom in the LNG sector. The decline in investment in oil refining was still really sharp for the second year in a row, and other manufacturing investment continued to fall quite steeply. Investment in the electricity sector and the energy pipeline transmission branch also continued to decline.

After contracting for two consecutive years, investments in machinery & equipment by large and mid-sized companies remained more or less flat last year. Construction activity was down over 4 % last year, thus falling for the third year in a row. Notably, despite a drop already in 2015, far fewer commercial and industrial buildings were completed last year than in 2015. Fewer apartment buildings were also completed last year compared to 2015. It was the first drop in housing completion since 2010.

Real fixed investment developments in Russia, 2010–2016

Source: Rosstat.