CBR not seeing fall in investment activity due to high key rate, expects trend to continue in 2025

YEKATERINBURG. Nov 15 (Interfax) - Business is maintaining investment activity despite the high key rate, including because of high profits earned in 2023 and 2024, the deputy head of the Central Bank of Russia's monetary policy department Mikhail Belov told journalists during the Russian Regions at the Focus of Changes conference in Yekaterinburg on Friday.

"Investment activity is not just holding steady; it continues to grow. It's just that in 2024, the growth rates - and we're still talking about growth, I must emphasize this - are somewhat lower than they were perhaps two quarters ago or at the end of 2023," he said.

Business investment levels in 2025 will be close to those of 2024, he said.

The critical limiting factor for companies' investment activity is the shortage of qualified personnel, he said.

"In terms of their own funds and profits, in 2023 non-financial sector enterprises earned profits amounting to 33.3 trillion rubles. That's a very large amount. This year, in 2024, we expect that the figures for profit will be very similar to these record-breaking 2023 numbers, maybe just slightly lower. This indicates that real-sector enterprises have resources they can use for investment," Belov said, adding that companies also use borrowed funds for investment projects, but to a lesser extent than their own.

Investment in fixed assets in Russia grew over 10% in H1 2024, although investment activity has recently slowed due to the high cost of borrowing and more advantageous deposits, Prime Minister Mikhail Mishustin said at a meeting dedicated to the economy on Thursday.