BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/10
Increases of investment in core economic sectors came virtually only from oil & gas production (up 11 %) and other extractive activities. In this respect, 2015 was similar to 2014. Investment in branches operating extensive infrastructure continued to plummet. The electrical power generation, transmission and distribution sector saw a drop of 32 %, oil & gas pipeline transmission was off 11 % and railway investment slumped 19 %. Investment in oil refining, which soared earlier in this decade, contracted well over 10 %. Investment in other manufacturing branches was also down several per cent.
The slump in construction activity worsened last year, falling 7 %. The biggest factors were drops in production of commercial and industrial buildings. Using data in nominal rubles (only nominal data is available), investment spending in machinery, equipment and transport vehicles was flat in 2015, following a considerable drop in 2014. Thus, the 2015 drop was also quite severe in real terms.
After falling drastically in 2014 when federal, regional and municipal governments sharply cut back on investment spending, their fixed investment spending last year rose slightly. Firms fully or partly owned by foreigners, and, according to the preliminary figures, privately held Russian firms, increased their investment spending slightly last year after a decline in 2014. Even so, the increase in 2015 was clearly outstripped by the rise of prices of investment goods.
As in 2014, firms continued to rely increasingly on out-of-pocket financing to finance fixed investments. Along with the lame financing from the state budgets, financing from other sources, e.g. borrowing, declined virtually across the board.