Most of the country’s leading companies believe the situation will further improve in 2023 despite Western sanctions, says consultancy Yakov & Partners
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Half of the largest Russian companies report an improvement in business conditions in the country and three-quarters expect the situation to continue to improve in 2023, according to a study by McKinsey’s former Russian division, consulting company Yakov & Partners.
In its latest CEO Barometer for 2022 research, 49% of Russian business owners noted an improvement in the state of their business over the past six months, which, according to the authors of the study, may indicate a recovery in sentiment in the Russian economy after a series of sweeping Western sanctions. At the same time, for 27% of respondents the situation has not changed, while 24% say it has worsened.
The study also uncovered an uneven impact of the current situation on different industries. “The representatives of the banking industry, IT and telecom, as well as retail and e-commerce were the most optimistic about the current state of their businesses. At the same time, 36% of representatives of the extractive and manufacturing industries reported a deterioration in the situation,” the report said.
Among the main challenges, the vast majority of respondents named foreign trade bans and the prospects for expanding sanctions. Least of all business owners are concerned about the decline in purchasing power within the country, inflation and climate change.
Although cost reduction and supply-chain adaptation were a priority for more than a third of those surveyed, the largest companies have not lost their appetite for investment and business development in Russia, the study shows. Among their priorities for the next six months, many company executives named the growth in the output of products and services, entering new geographical markets, and launching of new investment projects.
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More than 75% of respondents expressed confidence in improving or maintaining the current state of their businesses in the next six months.
“Our data speaks of the recovery of some industries after the events of this spring, and also reflects certain negative expectations of the extractive industries due to a possible decrease in production activity across the world. At the same time, Russian business has successfully survived the initial shock and is optimistic about the future,” Yakov & Partners concluded.
The study surveyed 115 CEOs of companies in all major sectors of the Russian economy with a turnover of more than a billion rubles ($15 million).
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