16 Sep 2020 17:10

Recovery of investment demand in Russia not to be quick, optimization of budget in 2021 will affect investment spending - Reshetnikov

MOSCOW. Sept 16 (Interfax) - Investment in fixed capital will fall 6.6% in Russia in 2020; recovery in 2021 will not be quick, among other things due to optimization of budget spending on investment, Economic Development Minister Maxim Reshetnikov said, presenting the adjusted macroeconomic forecast to the government.

"In the September forecast, the estimate for the downturn in fixed capital investment has also been improved - this year, the estimate for the downturn is 6.6%; before this, we estimated it at more than 10%. In Q2, the downturn was fairly moderate [7.6% in annual terms]. However we don't expect H2 to be simple. The reason is the delayed action of capital investment planning in companies," Reshetnikov said.

"Recovery of investment demand next year won't be so fast. Among other things, optimization of spending of the federal budget and regional budgets will have an effect, which will of course primarily be reflected in investment spending. We understand that the vigorous anti-crisis growth in investment spending this year will be hard to maintain next year," he said.

"Therefore, we'll reach the pre-crisis level for investment no earlier than in 2022, and from this period we're putting down investment growth at a rate higher than 5%, among other things owing to the launch of mechanisms to relaunch the investment cycle - what we are now busy with as part of implementing new legislation on protection and stimulation of capital investments," Reshetnikov said.

As reported, the Economic Development Ministry improved its forecast for investment in 2020 - minus 6.6% instead of the 10.4% forecast in June -, and expects investment growth of 3.9% in 2021, 5.3% in 2022, and 5.1% in 2023.