CBR business climate index returns to positive territory in June for first time since Feb

MOSCOW. July 26 (Interfax) - The Central Bank of Russia (CBR) Business Climate Indicator (BCI) returned to positive territory in June for the first time since February on the back of companies' positive expectations for the near future and a further decrease in pessimism regarding the current situation, the CBR said.

The BCI reflects actual, as well as anticipated changes in production and demand, based on participating businesses' assessments of the dynamic for the next three months.

The BCI rose to 0.4 points in June from minus 1.5 a month earlier.

"Assessments of the current business climate are improving for the second consecutive month. The contraction of demand has slowed, and in production companies are continuing to adjust to the new economic conditions," the CBR said.

"Despite significant sanctions restrictions, companies expect further recovery of demand and production volumes taking into account the development of new markets," the CBR said.

The strongest improvement in current conditions for doing business was reported by companies in extractive industries. They attribute this to a large extent to the ability to redirect exports of Russian fossil fuels from the European market to other countries, the CBR said.

The improvement of expectations in the corporate sector is particularly evident in wholesale trade amid the strengthening of the ruble and allowance of parallel imports, the CBR said. In automobile retail, these factors were supplemented by the growing supply of Chinese vehicles.

"However, businesses' expectations in general remain negative. A further slowdown of the decline of production was noted in most sectors. The process of looking for alternative suppliers and new customers continued, and the active reconfiguration of logistics chains is proceeding. An exception is transportation and storage, where the situation remains difficult under the influence of several factors, including disruption of logistics, problems with cross-border movement of freight, suspension of supplies, as well as the growth of transport costs," the CBR said.