BOFIT Viikkokatsaus / BOFIT Weekly 2021/51

Growth of the real volume of fixed investment, which accelerated in the second quarter, continued its fairly good rise in the third quarter. In second quarter, fixed investment was up by over 5 % from two years previous and third quarter by about 2.5 %. For the first three quarters of this year, total fixed investment was up by 4.3 % from two years previous, while investment of large and mid-sized firms as well as the state was up as a whole by 6.5 %.

In January-September, fixed investment of large and mid-sized mineral extraction firms, however, was down by over 4 % from two years previous. Indeed, capacity utilisation in the mineral extraction sector is still very low. While nearly half of extractive industry investment went to oil production, fairly similar to previous years, the volume of investment was down by nearly 10 % from two years previous. Investment in gas production, instead, was up 6 % from two years previous. Investment in technical support services for the oil & gas industry, a major investment category, recovered during the first three quarters of this year, but was still clearly down from two years previous. Fixed investment in production of petroleum products has risen by about 4.5 % from two years previous. Investment in pipeline transmission of oil and gas, which rather often fluctuates considerably from year to year, was up from 2020 but down from 2019.

Fixed investment of large and mid-sized manufacturing firms (not including petroleum products) was up by over 6 % from the first three quarters of 2019. The recovery in manufacturing has in the course of this year become quite broad-based. In several branches, however, growth simply reflects a recovery from last year’s investment drought. Of the main investment categories, metal refining took a wide lead with investment up by over 30 % from two years previous. Other notable investment driving manufacturing branches include pharmaceuticals (fixed investment growth of nearly 50 % from two years previous), the automobile industry (up by 30 %), production of other transport vehicles (up 18 %), as well as mechanical wood processing (up 36 %). Investment spending from government sector budgets has risen slightly further this year in real terms, but unlike 2020, significantly less than fixed investment overall.

Moscow has been the core driver of investment growth nationally this year, accounting for over 50 % of Russia’s total fixed investment on-year growth in the first three quarters of this year. Investments in Moscow grew by over 20 % y-o-y, and the capital’s share of Russia’s total fixed investment was nearly 20 %. The large investment sectors in Moscow are transport & warehousing, information & communications, as well as finance. While transport and information & communications investments in Moscow were up by 24–29 % y-o-y, investment in the finance sector climbed up by more than 60 %. In combination, these three Moscow’s top investment categories accounted for a third of the rise in the country’s total fixed investment from the first three quarters of 2020.

 

Fixed investment in Russia has briskly recovered from last year’s relatively mild dip

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Sources: Rosstat and BOFIT.


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