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Russian economy on stabilization path - business circles

May 27, 2014, 16:46 UTC+3 Alexandrova Lyudmila
Kirill Dmitriyev (L), general director of the Russian Direct Investment Fund, and Russia's president Vladimir Putin at SPIEF 2014

Kirill Dmitriyev (L), general director of the Russian Direct Investment Fund, and Russia's president Vladimir Putin at SPIEF 2014

© ITAR-TASS / Mikhail Klimentyev

MOSCOW, May 27. /ITAR-TASS/. Despite the recent grim outlook, the Russian economy seems to be straightening out and even improving — at least according to most Russian entrepreneurs. One of the multiple reasons for optimism is that Russia has got away with it relatively cheap despite Western sanctions.

The survey Capital Confidence Barometer issued on Monday by Ernst & Young (E&Y) subtitled A Little Sun in Cold Water has shown that about 55% of Russian entrepreneurs believe the Russian economy is recovering, while 63% is sure the Russian market will be stable over the short term. Lending resources will become more accessible, hope 76% of respondents; the same amount expects to have better gaining this year than a year before.

According to the Russian Federal State Statistics Service (Rosstat), industrial production started growing at the beginning of the second quarter: in April, production had increased 0.8% month-on-month less seasonal factors.

Director-General of GKFX Dmitry Rannev quoted by the Nezavisimaya Gazeta daily explains optimism with the high oil price at $110 a barrel, which means the flow of petrodollars into Russia does not wane.

“Russia is still the country where you can gain money, if you have a comprehensible business idea. Banks are vying for customers, so getting a loan if you have good collateral or stable money flow is also not impossible. Administrative barriers are getting lower, albeit slowly,” he said.

“The country has relatively easily survived the West’s sanctions, while the Olympic success and the Crimean story give hope as business sees Russia gain strength on the international arena and finds development alternatives in Asia,” Rannev added.

Business ombudsman Boris Titov believes it was President Vladimir Putin’s statement at the St. Petersburg International Economic Forum that dispelled businessmen’ fears over sanctions.

Positive business trends are obvious in different sectors - from more accessible loans to general support for business, said chairman of the board at Concern General Invest Andrei Nikityuk. Business is also clearly confident about market stability in the near future.

“First, business environment is not deteriorating, which is important,” the owner of the Renova Group, Viktor Vekselberg, is quoted in RBC daily. “I do not see any fantastic or dramatic changes but better predictability is a hard fact.”

Second, the businessman believes, the dialogue with the government is improving.

“We know for sure that we are being listened to, that hardly any decisions are made without prior consultation, though this does not mean they are all to our benefit. But our communication is a dialogue,” he added.

Speaking of possible replacements for inaccessible financing from outside in case of tougher sanctions, Russian Standard’s owner Rustam Tariko said the Russian market was quite liquid, though not cheap.

“Russian money is now a viable alternative to Western financing. Our banking system is operating normally, the people did not lose trust and did not quit lending,” Tariko believes.

Making lending cheaper was a challenging goal but a great breakthrough is possible, if the measures the president talked about prove efficient, he added.

Owner of the JSFC Sistema, Vladimir Yevtushenkov, is rather philosophically minded.

“Getting into some trouble each two or four decades seems to be our country’s karma or fate. It will always find a way out — sometimes at the price of great sacrifice but each time the country gets a great impetus,” he said. The country needs a mighty kick to wake up from its relaxed slumber and start creating, Yevtushenkov believes.

The lending cost is not everything, the entrepreneur believes, though this is a highly important factor. Neither is investment appeal: “South and North Koreas once were in identical conditions. But where are they now? That’s the difference.”

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