By Rhod Mackenzie
For the first time in a year, the revenue of non-commodity companies in the Russian Federation showed growth. In April, the turnover of such enterprises increased by 7.4% compared to 2022. This was reported to Izvestia in FinExpertiza. The profit of large and medium-sized enterprises not related to the oil and gas industry increased by 0.4% in annual terms from January to April, to 52.8 trillion rubles. The largest revenue growth came from transportation and storage, electricity, construction, scientific activities, as well as the hotel and restaurant business . Analysts note that such dynamics is associated with the growth of domestic investment and import substitution. Also, the decrease in the ruble exchange rate also affects the increase in the income of companies in nominal terms, experts say.
Came to the rescue
For the first time in almost a year, the revenue of Russian non-primary companies showed growth: in April, the turnover of such enterprises increased by 7.4% compared to the same period in 2022 . This was reported to Izvestia in the analytical service of the audit and consulting network FinExpertiza.
In general, the revenue of Russian large and medium-sized enterprises not related to the oil and gas industry from January to April 2023 increased in annual terms by 0.4%, to 52.8 trillion rubles, according to a study of the organization, which Izvestia has read .
The largest growth was shown by such industries as electric power, construction, scientific activity, transportation and storage, as well as the hotel and restaurant business .
Izvestia sent inquiries to the Ministry of Finance, the Ministry of Economic Development, the Ministry of Industry and Trade, as well as to companies in these industries.
The Ministry of Finance previously reported that, according to preliminary data, the federal budget of the Russian Federation in January-June was executed with a deficit of about 2.6 trillion rubles. Oil and gas revenues during this period continued to decline and decreased by 47% to more than 3.3 trillion rubles. At the same time, non-oil and gas revenues grew by 17.8% year-on-year, to almost 7 trillion rubles .
“The increase in non-oil and gas revenues shows a positive trend in the development of the Russian economy and is due to the growth of domestic investment, as well as the policy of import substitution ,” Andrey Loboda, an economist and director of communications at BitRiver, told Izvestiya. This trend shows the development of sectors of the Russian economy focused on the domestic market - manufacturing, electric power, the service sector and mining , he added.
Once the Russian oil and gas industry actually compensated the budget for the lack of taxes and fees from other areas, but in the context of sanctions restrictions and a decrease in gas exports, new technological industries will play an increasingly important role in Russia, agrees the founder of Rossgram (an analogue of the social network Instagram, which belongs to Meta, recognized in the Russian Federation as an extremist organization) Kirill Filimonov.
“ Oil is gradually being replaced by “digital oil” – high-quality services and applications that meet the needs of millions of users within the country and around the world. Russia is already showing significant achievements in IT development, is actively developing social networks and digital platforms , and thanks to the trend towards import substitution, this trend will only gain momentum,” he noted.
Last year, after the introduction of anti-Russian sanctions, many carriers in European directions lost their jobs , said Vladimir Matyagin, head of the Gruzavtotrans association. However, by the end of 2022, the logistics industry began to recover, companies began to rebuild on new routes (for example, through Iran, China, Turkey), he added. Also in the Russian Federation, construction is actively underway, especially road construction, which gave a positive trend in the field of cargo transportation , the expert emphasized.
Income growth in the traditional areas of SMEs - hotels, restaurants, as well as technology, suggests that the traditional sectors of the urban economy were able to use their potential, noted at the Moscow business protection headquarters .
As Izvestia wrote, the export of pipeline gas from Russia to non-CIS countries in 2023 may be halved - from 100 billion cubic meters. m to 50 . Moreover, shipments decreased throughout 2022 as different routes were lost: against the backdrop of the conflict in Ukraine, the supply of raw materials from Russia to Europe was gradually blocked. Nord Stream 1 was stopped due to sabotage, the Yamal-Europe gas pipeline is not supplied due to Russian counter-sanctions, and Nord Stream 2 was never put into operation.
Budget question
One of the most promising sectors of development for the next year in Russia will be the defense industry, metallurgy, and agriculture , believes Vladimir Chernov, analyst at Freedom Finance Global.
— Due to the introduction of a number of external restrictions on the oil and gas industry, the Russian Federation began to increase the export of goods and services that are not related to the oil and gas industry. For example, a record grain harvest will generate growth above the planned non-oil and gas revenues of the Russian Federation, and fees from fertilizer producers this year should amount to 120 billion rubles , he said.
Also, the Russian power industry was practically not affected by external pressure, and it can increase revenues , the analyst added.
In 2022, the state invested unprecedented funds in the real sector of the economy, as a result of which investment activity in Russia increased by 5.9% in annual terms , said the head of the AIP audit and consulting group, an expert on financial and legal business security of the Moscow branch of Opora Russia" Sergei Yelin.
Earlier, in an interview with Izvestia, Ilya Torosov, First Deputy Minister of Economics, said that in 2022 Russia was able to attract 4.6% more investments to the economy compared to 2021 - 27.9 trillion rubles.
The deferred effect of investment manifested itself in 2023 , when revenues from the non-primary sector of the economy began to grow. In addition, support for the machine-building sector, providing it with a state order, made it possible to raise the incomes of entire groups of the population, especially in industrial regions , Sergei Yelin added.
Russian manufacturers are increasing the range of their own products against the backdrop of the withdrawal of many foreign brands from the market, Eduard Animaev, general director of EdAn Engineering LLC, owner of the NARA filling station equipment trademark, told Izvestia. But the pace of import substitution could be much higher if the business more actively switched to domestic products - now many companies still use foreign equipment imported through parallel imports , he added.
The growth in revenue and income declared in the FinExpertiza study does not take into account the depreciation of the ruble, the increase in prices for basic goods and increased inflationary pressure , said financial consultant Mikhail Akopyan. For example, in the first half of this year, the ruble has weakened by more than 11% against major world currencies , he added.
Artem Tuzov, Executive Director of the Capital Market Department at IC IVA Partners, believes that due to the depreciation of the ruble and import substitution, both types of federal budget revenues will be higher than planned .
This article originally appeared in Russian at iz.ru