Economic uncertainty, low domestic demand and high taxes are the main barriers for economic growth.
MOSCOW, May 22, 2018. The Russian Public Opinion Research Center (VCIOM) presents the data of a study on business development and the resumption of economic growth conducted among top managers.
According to entrepreneurs, as before the main factors that hamper the development of their companies are economic uncertainty (4.0 scores out of 5.0), high tax rates (4.0 scores) and decreasing domestic demand (3.8 scores).
About two-thirds of the surveyed managers (63%) consider that due to the current economic conditions the situation in their companies has deteriorated (59% in 2017; 72% in 2016). Twelve percent point to improvements (15% a year ago). The key factors which have been negatively influencing the business performance over the recent two years are energy prices (gas and electricity), production costs, and economic uncertainty.
Today the businessmen assess the measures taken by the Russian government to revive economy more negatively than a year ago: 69% say they are ineffective (vs 64% in 2017). Simultaneously, the share of business owners and top managers who give positive assessments has decreased from 32% to 25%. Forty-one percent of respondents say that the government does not have an economic growth strategy; 16% believe that there is an effective policy; a further 33% consider that there is a strategy but it does not seem to be effective.
More than three-quarters of entrepreneurs (76%) consider the current state of the Russian economy as problematic or disastrous. At the same time, half of businessmen (53%) stay positive and expect the economy dynamics to be positive over the next two or three years. About half of respondents (45%) assume that their businesses will be actively developing over the next three years. The share of those who think that their activities will be shutting down is 23%.
The policies aimed at economic growth should be focused on increasing standard of living and quality of life of the Russian people (3.8 scores out of 4.0), conducting a tax reform (3.6 scores), and restricting tariffs for the services provided by infrastructure and raw material monopolies and decreasing their rates (3.5 scores).
The percentage of the entrepreneurs who are aware of the program Strategy of Growth (by Boris Titov) is 18%. They mark the following strong points this strategy contains: proposals how to promote economic growth; comprehensive understanding of the business problems; focus on achieving the economic growth not in the future but now. As to the main obstacles to this program implementation, the key ones refer to failure to implement this program if it is not supported by the president, the level of corruption and imperfections of institutions, and inability of the Government to implement this program.
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VCIOM survey was conducted in 8 federal districts in May 2018 at the request of the Commissioner for the Russian President on Protection of the Rights of Entrepreneurs. The survey involved top managers of organizations (owners/directors, senior managers). The survey used Computer Assisted Telephone Interviewing (CATI) with a sample size of 1,401 persons. Purposive sample representing businesses based on their OKVED (Russian economic activity classifier) activities and company sizes was used.
Do the following factors have any constraining impact on the functioning of your company/business? (closed-ended question, one answer per each factor, average score on a 5-score scale, with 1 being “definitely yes” and 5 “definitely no”) | |||
| 2016 | 2017 | 2018 |
Economic uncertainty | 4.0 | 3.9 | 4.0 |
High tax level | 3.7 | 3.8 | 4.0 |
Decreasing domestic demand | 3.8 | 3.8 | 3.8 |
High energy prices (electricity and gas) | 3.6 | 3.7 | 3.7 |
Quality of legislative control over economy | 3.5 | 3.7 | 3.7 |
High labor costs | 3.4 | 3.5 | 3.6 |
Government lacking clear economic program | - | - | 3.6 |
Higher interest rate for commercial borrowing | 3.6 | 3.6 | 3.5 |
Ruble exchange rate | 3.9 | 3.5 | 3.5 |
Lack of skilled personnel | 3.1 | 3.3 | 3.5 |
Shortcomings of long-term capital assets | 3.5 | 3.5 | 3.5 |
Market monopolization | 3.1 | 3.3 | 3.3 |
Complicated bureaucratic procedures | 3.1 | 3.2 | 3.2 |
Poor transport infrastructure and high shipment costs | 3.1 | 3.2 | 3.1 |
Shortcomings of court system | 2.8 | 3.0 | 3.1 |
Excessive activities of supervisory bodies (checks) | 2.9 | 3.1 | 3.1 |
Unfair competition coming from the shadow market | 2.8 | 2.9 | 3.1 |
Lack of transparency in government procurement | 2.8 | 2.9 | 3.0 |
High price of land | 2.8 | 3.0 | 2.9 |
Depreciation and lack of equipment | 2.7 | 2.8 | 2.8 |
High ‘corrupt rent’ | 2.3 | 2.5 | 2.6 |
Competing import | 2.2 | 2.4 | 2.4 |
High level of pressure coming from law enforcement bodies | 1.9 | 1.9 | 2.0 |
How has the current economic situation affected your company/business: has the company situation improved, deteriorated or stayed the same level? (closed-ended question, one answer per each factor, % of all respondents) | |||
| 2016 | 2017 | 2018 |
The situation has improved | 2 | 5 | 4 |
The situation is likely to have improved | 5 | 10 | 8 |
No changes | 18 | 26 | 25 |
The situation is likely to have deteriorated | 46 | 35 | 37 |
The situation has substantially deteriorated | 27 | 24 | 26 |
Don’t know | 2 | 0 | 0 |
Please assess how has the following factors affected your business over the recent year? (closed-ended question, one answer per each factor, average score on a 5-score scale, with 1 being “definitely deteriorated” and 5 being “definitely improved”) | |||
| 2016 | 2017 | 2018 |
Influence of the organized crime | 3.1 | 3.1 | 3.2 |
Techniques | 3.1 | 3.1 | 3.2 |
Hidden wages | 3.1 | 3.1 | 3.2 |
Pressure by law-enforcement bodies | 3.0 | 3.0 | 3.0 |
Effective performance of employers' unions | 3.0 | 2.9 | 3.0 |
Import competition | 2.9 | 2.9 | 2.9 |
State procurement openness | 2.9 | 2.9 | 2.9 |
Illegal takeover by public officials and affiliated structures | 2.8 | 2.9 | 2.9 |
Quality of work of the Business Rights Commissioner | 2.9 | 2.9 | 2.8 |
Effective work of sectoral associations | 2.9 | 2.8 | 2.8 |
Size of “corrupt rent” | 2.8 | 2.8 | 2.8 |
Effective judicial system | 2.8 | 2.8 | 2.7 |
Cost of commercial loan | 2.1 | 2.5 | 2.7 |
Unfair competition by the shadow market | 2.6 | 2.7 | 2.7 |
Quantity and quality of bureaucratic procedures | 2.6 | 2.6 | 2.6 |
Quality of economic legislation | 2.6 | 2.6 | 2.6 |
Provision of long-term investment funds | 2.3 | 2.5 | 2.6 |
Coast of land | 2.4 | 2.5 | 2.5 |
Availability and cost of labor resources | 2.6 | 2.6 | 2.5 |
Market monopolization | 2.6 | 2.6 | 2.5 |
Tax rates | 2.6 | 2.5 | 2.5 |
Availability of transport infrastructure and shipping costs | 2.3 | 2.4 | 2.5 |
Level of demand for products | 2.2 | 2.5 | 2.4 |
Uncertain economic situation | 1.9 | 2.2 | 2.2 |
General level of production costs | 2.1 | 2.2 | 2.1 |
Energy prices (electricity and gas) | 1.9 | 2.0 | 2.0 |
Generally, how do you assess the effectiveness of measures taken by the Russian government to revive economic growth? (closed-ended question, one answer, % of all respondents) | ||
| 2017 | 2018 |
Very effective | 2 | 2 |
Rather effective | 30 | 23 |
Rather not effective | 38 | 42 |
Not at all effective | 26 | 27 |
Don’t know | 4 | 6 |
In your opinion, does the Russian government have a well-thought-out strategic plan to revive economic growth, if yes, can it be considered effective? (closed-ended question, one answer, % of all respondents) | ||
| 2017 | 2018 |
Yes, the Russian government has an effective plan to get out of the current economic situation | 19 | 16 |
Yes, the Russian government has a strategy to get out of crisis but it cannot be considered effective | 37 | 33 |
No, the Russian government has no strategy; all the decisions are spontaneous | 38 | 41 |
Don’t know | 6 | 10 |
How do you generally assess the state of the Russian economy? (closed-ended question, one answer, % of all respondents) | ||
| 2017 | 2018 |
Good | 3 | 4 |
Stable | 16 | 17 |
Problematic /crisis | 68 | 66 |
Catastrophic | 12 | 10 |
Don’t know | 1 | 3 |
In your opinion, what will the dynamics of the Russian economy be over the next two or three years? (closed-ended question, one answer, % of all respondents) | ||
| 2017 | 2018 |
Positive | 11 | 11 |
Rather positive | 49 | 42 |
Rather negative | 27 | 29 |
Negative | 9 | 11 |
Don’t know | 4 | 7 |
In your opinion, how will your company/business evolve over the next three years? (closed-ended question, one answer, % of all respondents) | ||
| 2017 | 2018 |
It will be actively developing | 13 | 11 |
It is likely to develop | 37 | 34 |
No substantial changes will occur | 29 | 30 |
It is likely to go downhill /shut down | 8 | 11 |
It will go downhill /it can shut down | 12 | 12 |
Don’t know | 1 | 2 |
Today many programs aimed at economic growth revival are considered. Can you assess the importance of the following measures? (closed-ended question, one answer per each measure, average score on a 4-score scale, with 1 being “not important” and 4 being “very important”) | ||
| 2017 | 2018 |
Improving living standards and quality of life | 3.8 | 3.8 |
Tax reform promoting economic growth | 3.5 | 3.6 |
Restriction on tariffs on services provided by infrastructure and raw material monopolies and rate decrease | 3.5 | 3.5 |
Development of international cooperation, promotion of the interests of national manufacturers of non-resource sector | 3.4 | 3.4 |
Long-term and available loan for economy | 3.4 | 3.4 |
Restricted stimulation of demand, creation of new markets for national manufacturers | 3.4 | 3.4 |
Development of digital economy | 3.3 | 3.4 |
Decreasing administrative pressure on business | 3.4 | 3.3 |
Providing macroeconomic stability (low inflation, deficit-free budget, low volatility of ruble) | 3.2 | 3.2 |
Court reform | 3.1 | 3.2 |
Reform of criminal economic law | 3.1 | 3.1 |
Introduction of dormant land and property assets into the "stream of commerce” | 2.9 | 2.9 |
Which of the below-mentioned advantages of the Growth Strategy program (Boris Titov’s program) do you consider to be the most important? (closed-ended question, not more than two answers, % f those who are aware of the program – 18% across sample) | |
| % of respondents |
It proposes active stimulation of growth, decrease of credit rates, decrease of taxes, ways to stop tariff rise, demand generation | 49 |
It is based on detailed understanding of the business problems | 16 |
It is focused on the economic growth not in the distant future but now | 14 |
It proposes to achieve economic growth without any turmoil and big reforms | 10 |
I do not see any advantages of this program | 9 |
Don’t know | 9 |
In your opinion, which of the below-mentioned factors can impede the implementation of the Growth Strategy program (Boris Titov’s program)? (closed-ended question, not more than 5 answers, % of those who are aware of the program – 18% across sample) | |
| % of respondents |
If this program is not presidential program, it will hardly be possible to implement it | 48 |
Level of corruption and imperfections of the institutions | 41 |
The current government is not capable of implementing this program | 32 |
Central bank does not support lowering of the rates in economy | 27 |
Other | 13 |
Don’t know | 8 |
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