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Russian business sentiment upbeat

January 18, 2008 | RBC

Russian businessmen are optimistic about future.

Russian businessmen are generally optimistic about the future of their companies and Russia’s economy as a whole. According to research by the Strategic Research Center at Russia’s national insurance company Rosgosstrakh, those operating in the services sector were the most upbeat, while those in the public catering industry had the gloomiest outlooks. Meanwhile, experts are warning of problems ahead.

The research was conducted in late 2007, taking the views of 3,074 top corporate managers. The business sentiment index, reflecting manufacturers’ expectations for the future of their companies and the country’s economy in general, was put at 140 points. “This means that the number of optimists among Russian businessmen is 40 percentage points higher than that of pessimists,” Rosgosstrakh’s analysts said. The greatest number of optimists was in the services sector (with difference between optimists and pessimists at 45 percentage points), followed by trade (42 percentage points), construction (34 percentage points), manufacturing (33 percentage points), and public catering (21 percentage points).

As for the United States and the Eurozone, the Business Optimism Index shows that there is about an equal amount of optimism and pessimism, according to Alexei Zubets, the head of the Strategic Research Center. “Businessmen are optimistic about opportunities to expand their businesses,” says Anton Struchenevsky, an economist at Troika Dialog. «The Russian economy is growing fast, which means favorable conditions for entrepreneurs,” he added.

The US economy is on the brink of recession, and is expected to grow 1.2 percent in 2008 under the best-case scenario, while the Eurozone economy is projected to grow by 2 percent, against Russia’s growth target of 6.3 percent.

However, some analysts say that business optimism is showing signs of abating. “Real profits rose in 2007, and many underestimated economic problems facing us this year, in the first place, inflation,” noted Igor Nikolayev, chief strategic analyst at FBK. Tighter lending terms could also dampen expectations, added Valery Mironov, leading expert at the Development Center.

According to the Institute for the Economy in Transition, the year 2007 ended in the minor key. “Continuing slowdown in demand is unnerving producers, forcing them to correct their production growth plans. Outlooks for early 2008 are not very optimistic, either,” the Institute’s research stated.

Analytical department of RIA RosBusinessConsulting

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