Censor.NET reports citing Bloomberg.
Anatoly Anisimov is still wistful about the cow barn he'd planned to build. With the latest Swedish milking machines, it would have cut his costs and boosted by 40 percent the size of the herd at the state-owned farm that he runs outside Moscow. Anisimov, 50, has put his plans on hold as he digs in for what could be Russia's longest recession in almost two decades. "Nothing good awaits us next year either," he says.
For the moment, the Kremlin has been dialing back the tensions in Ukraine, which could lead to an easing of the sanctions imposed by the U.S. and Europe over the crisis there. Russian officials say the economy has hit bottom; business executives are unpersuaded. Capital investment declined six percent in the first eight months of this year. Many companies have cash - corporate profits are up 38 percent this year, boosted mainly by the drop in the ruble - they just aren't ready to spend it.
"Businessmen and ordinary people have formed strong negative expectations," says former Finance Minister Alexei Kudrin, compounding the impact of sanctions and the plunge in oil prices. "That induces capital outflows and leads to greater economic contraction."
Even if the economy recovers in the next few years, growth will be so slow that Russia's share of world output will still shrink to the lowest level since the collapse of the Soviet Union, erasing the gains of President Vladimir Putin's 15-year rule, he says.
Already, budget pressures forced the government to cut or delay parts of the 20-trillion-ruble military modernization that Putin has made a top priority in his drive to rebuild Russia's global might. Russia bounced back fast from the previous two recessions, returning to growth within 18 months. This time, even the central bank's official forecast expects the contraction to continue into next year, making this the longest recession since the one that followed the demise of the Soviet Union, and recovery is expected to be tepid once it begins.
"This crisis is a bad one because it's going to last a long time," says Sergei Kolesnikov, president of Tekhnonikol, a mid-sized maker of construction materials. He halted plans to build a new insulation factory, reflecting a 15 percent decline this year in domestic sales as builders slashed spending. Exports have increased thanks to the drop in the ruble, which has made his products cheaper in foreign markets, he says. Still, he's not optimistic. "It's like running into the wind uphill in the dark," he says. "It wears you out."
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