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Bank caution will make Russian firms draw on own funds

Monday, July 31, 2017

Subject

Financing sources for Russian companies.

Significance

Low investment rates in the last three years have led to substantial fixed asset deterioration. Russian companies are trying to make better use of existing assets instead of renewing productive capacity, and the main source of investment is their own funds.

Impacts

  • As EU and US sanctions persist, Russia will strive to boost domestic capital markets.
  • Prolonged low investment will restrict economic growth prospects for the medium-to-long term.
  • Insufficient investment will limit productivity and undermine product competitiveness.
  • Signs of economic recovery may boost mergers and acquisitions.
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