Posted 21 сентября 2020,, 07:16

Published 21 сентября 2020,, 07:16

Modified 24 декабря 2022,, 22:38

Updated 24 декабря 2022,, 22:38

Raised from the bottom: business quarantine panic changed to timid optimism

Raised from the bottom: business quarantine panic changed to timid optimism

21 сентября 2020, 07:16
Business sentiment began to improve.

The growing optimism is explained by the measures of state support for industrial enterprises and agriculture, although there are not so many reasons for it: 40 % of manufacturing enterprises operated at a loss, every 7 in a pre-bankruptcy state. In the service sector, the situation is even worse.

Yelena Ivanova, Natalia Seibil

Since June, the mood of the heads of industrial enterprises has been improving. This conclusion was made by scientists from the Center for Business Studies of the Institute for Statistical Research and Economics of Knowledge of the Higher School of Economics, having interviewed the heads of 4 thousand Russian large and medium-sized enterprises in almost every subject of the Federation. The directors of the enterprises positively assessed the situation with demand, production output, capacity utilization and the number of employees. These changes are especially visible if we compare the data of the April and August polls. Then the industry's expectations were at the level of the crisis year of 2009. August came, and it turned out that everything was not so bad. According to entrepreneurs, the economy has begun to recover. Things began to go better in industry, followed by agriculture.

Динамика индекса предпринимательской активностиДинамика индекса предпринимательской активности
Динамика индекса предпринимательской активности

- In industry, the recession is slowing down, although they are still working in the negative zone. The builders are at a sufficient distance from them, with worse grades. For builders, the situation is starting to revive a little, and the business activity of the industry begins to gradually recover. This is largely due to mortgage lending, and with the help of the state to builders - appropriate vacations, bonus programs, says Georgy Ostapkovich, director of the Center for Business Studies at the Higher School of Economics.

Those enterprises that worked for the end consumer were forced to either stop production or work for a warehouse. The financial situation deteriorated and layoffs of employees began, although they were minor. The rest, especially those working for the state order, continued to release products. In June, consumer demand began to recover, which led to an improvement in respondents' sentiments.

First of all, the human factor played its role in this. After the spring panic due to quarantine and economic uncertainty, workers and managers felt more confident as both Russia in general and Moscow in particular went through this period relatively calmly. In addition, people are hoping that a covid vaccine will be available very soon.

The worst hit during the lockdown was small businesses and private businesses. In the Russian industry, the share of small non-state enterprises is small - they are only slightly more than 10%.

Фото: Центр конъюнктурных исследований НИИ ВШЭ

“The main volume of industrial production in the country is formed precisely by large industry-forming and system-forming enterprises, directly or indirectly, through government orders, affiliated with the state, and the state“ does not abandon its own people”, - the expert says.

The overwhelming majority of large enterprises received support from the state either through direct transfers or other bonuses. This was done primarily in order to prevent an increase in unemployment, especially among highly qualified personnel. Employment in Russia is declining. According to Rosstat, it was 6.3 percent. But the churn in industry is the lowest. The state constantly subsidizes enterprises in order to raise labor productivity - the most important factor in economic growth.

The political situation in the country and sanctions played a paradoxical role during the lockdown. Large high-tech projects in the modern world require the participation of not only several companies, but also countries. For example, 100 countries participated in the construction of the Hadron Collider near Geneva. The participation of Russian companies in such projects is minimal, so industrial enterprises did not affect the closure of borders, as was the case in countries with developed economies, especially those focused on export. Another question is what quality products are produced by our enterprises, and how they are going to modernize the country without such broad ties and technology transfer. But in this situation - there would be no happiness, but misfortune helped.

Фото: Центр конъюнктурных исследований ИСИЭЗ НИУ ВШЭ; Росстат

The closure of the borders also had a negative impact - the supply of imports of equipment, components and raw materials significantly decreased. However, this did not greatly affect the situation - firstly, the utilization of production capacities did not exceed 68% even in August. Secondly, good managers always have stock in their warehouses, which, apparently, was enough.


As you know, the state is never a good manager. This fully applies to state-owned enterprises. Even in the most innovative Russian sector - the manufacturing industry - Rosstat counted 40% of unprofitable enterprises in the first half of the year. In the extractive industry, the situation is even worse. The coal industry is working at minus 57.5%, and in the oil and gas industry - 50% of companies. Up to 16% of large and medium-sized enterprises are in a pre-bankruptcy state. Small business is not covered by this study, but scientists suggest that the situation there is even more dire.

As long as the authorities pay money and provide tax holidays, the situation remains bearable. The big question is what will happen in October when the bonus programs end.

- Unfortunately, payment defaults imminent until the end of autumn, debt restructuring and bankruptcy of economic agents will be typical not only for industry, but also for organizations of other types of economic activity, and how the banking system will react to all these aggregate financial risks is a big question, - believes Ostapkovich.

If the programs to support the industry continue, but the problem of the industrial decline may grow a macroeconomic one, because the banks provide holidays on loans and other bonus programs without canceling their obligations, for example, on payments of interest on deposits. The growth of lending will inevitably lead to an increase in bad debts, which will simply have to be written off.

Services sector

This area of the economy has suffered like no other. 63% of those surveyed reported a decrease in demand at the end of the second quarter and only 4% of its growth. Every fourth respondent reported staff reductions. Prices for services fell in every fourth enterprise. The entrepreneurs named uncertainty as the main problem of the industry. Most service companies are pessimistic and have negative outlooks for the future - not only for the third quarter, but until the end of the year. 54% of respondents are not sure about their future. Every second spoke about the lack of money, 41% complained about high taxes. In the second quarter, every second enterprise in the service sector was in a pre-bankruptcy or pre-default state. The researchers say that, of course, half of the enterprises will not close, but it is highly probable that one in five enterprises will be forced to default or go into bankruptcy.

The main impact of the coronavirus fell on hotels, travel agencies, restaurants and other enterprises providing services to the population, not only in Russia, but throughout the world.

- Those organizations in the service sector that will continue their activities, and we will definitely observe the “exodus” of a certain part of economic agents, will have additional financial costs that are not related to the costs of their main activities in the pre-pandemic period. These are, first of all, the costs of meeting strict standards of sanitary safety and hygiene, strengthening social distancing. Moreover, these measures will be introduced for a long period of time, be under increased, possibly excessive, control of the relevant authorities and will certainly require serious financial investments, says Georgy Ostapkovich.

Only monopolists will be able to transfer these additional costs to the price of services, the rest will have to reduce prices, since the income of the population has fallen and will continue to fall, therefore, demand will recover slowly. If an organization of the service sector is not a monopolist in its local market and operates in conditions of fair competition with other similar firms, they are unlikely to be able to transfer all these costs into the price of services. Although a partial rise in price as a result of the launch of this mechanism is likely to take place. The implementation of all these measures will require from entrepreneurs not only additional costs, but will also largely depend on the negotiability of service market participants with vigilant controllers, which can result in even greater costs, Georgy Ostapkovich believes.

Entrepreneurs offering services to the public are especially afraid of a second wave of the epidemic and a second lockdown. Director of "Park Skazov" Alisa Larionova does not exclude the possibility of re-closing for several months:

“Our business is not deferred and accumulative in nature - a person will not come to us twice this week, if he did not succeed last. In the Sverdlovsk region, a third of the companies from the sphere of mass entertainment and services are on the brink of bankruptcy or went bankrupt, and we are afraid that the second wave may finally reduce the sphere by 30% - not all have the necessary resources and mobility. In addition, concerns are caused by the decline in the quality of service and service, many companies with the same costs will not survive the second wave". Konstantin Chaikin, the founder of the luxury watch manufacturer, hopes that the second lockdown will not come:

“Before the end of the crisis, we suspended many projects and the purchase of new equipment, now we are waiting for it to end. Many foreign companies are reducing production volumes. For example, one of the largest Swiss manufacturers, realizing that demand will fall by 30%, reduced production for this year by 40% in order to maintain its demand in the future. We are building a similar policy - we are slightly limiting production in order to maintain the demand for our products in 2021".

The vast majority of enterprises in the service sector are the very small private enterprises that will not receive such financial support from the state as large systemically important ones. For them, the moods of their owners have an existential meaning.

“If the second wave starts, it will not just put before businesses the issue of paying rent, taxes, salaries in conditions of zero income. It will deprive most of the entrepreneurs of hope for recovery, and they will simply give up”, - says Maxim Yeltsov, General Director of First Mortgage Agency. “In my experience, a disaffected businessman is a very sad story, as he is an employer who creates a future not only for himself but also for his employees. I would not like to go to the second wave, because it will radically change the market, and the whole world as a whole".


The real winner during the coronavirus era was food retail. Demand during the quarantine period has grown significantly, for certain categories of goods - 10 times. Turnover figures have doubled, sometimes even tripled. Andrey Karpov, Chairman of the Board of Retail Market Experts, believes that food chains have not lost anything, but only gained new experience, received the necessary impetus for the transition to the digital economy:

- Many players were able to organize online sales, which they did not have at the beginning of the year or were in their infancy. Pyaterochka, Perekrestok - X5-Retail - have built up a significant audience and their own capabilities to the point that they eventually became the leader in the Russian market in terms of delivery. They were the leaders offline, and online they did not have such indicators before the pandemic.

The most affected area in non-food retail is the sale of clothing and footwear. While large marketplaces like WildBerries have only increased their customer base, normal stores cannot even establish any online channels.

"If you do not trade in brands, then making a branded store on the Internet is quite difficult and often impossible. Marketplaces trade in what third-party suppliers expose, so they can have millions of types of goods. Not a single physical store can even imagine this", - says Andrey Karpov.

By autumn, non-food retail did not recover even to the level of 2014-2015. It will take the industry several years to get to last year's level. Moreover, there are a number of other problems that create difficulties for the light industry - a fall in the ruble exchange rate, a decrease in the purchasing power of the population, which is reflected in turnover, says expert Karpov. When asked what will happen to retail if new restrictions are introduced, experts remind that it is not yet clear how stores survived the first wave. Tax payments have been postponed until October. The spring season has failed, retailers are afraid of ordering new goods for the autumn season in the volumes of last year. In other words, if the store exists now, this does not mean that it will survive further. The new quarantine will not affect those who have established online trading, but a significant part of the market will be thinned out.


Economists believe that if ineffective unprofitable enterprises leave the market, this will be the beginning of economic recovery. According to Rosstat, in the first half of the year, 36% of small businesses were unprofitable. If 20-30 percent leaves the market, the economy can reach a new level of economic development through creative destruction. The Higher School of Economics says it will take at least two years to get back to the 2019 level. The central bank is more pessimistic in this sense.

“But the most important thing is that a flock of the “black swans” (as unforeseen events causing severe crises are called“ NO ”on the financial market) does not come”, - Georgy Ostapkovich believes. - Of these, three critical "swans". First: I don’t know about the second wave of the pandemic, I don’t think they got out of the first wave. The main thing is that the mutation of the virus does not start. Second, it is important that the prices for Russian export goods (hydrocarbons, metal, timber, grain) do not fall sharply. In the structure of our exports, 85% is accounted for by raw materials.

There is also a third circumstance that neither the Russian authorities nor business can influence. If the European Union and China slow down their growth rates, they will reduce their purchases of fuel resources. Russia can only root for China and Europe to grow at high rates. Then they will be interested in our export goods.