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Russian business suffers losses amid Western sanctions and inflation
Problems in Russian business are explained by the increase in costs for raw materials, components, labor, as well as increased tariffs and the complexity of logistics chains.
According to official data, the problems in the Russian economy have become more obvious. Last year, the profits of Russian companies amounted to 30,4 trillion rubles, which is 6,9% less than in 2023. This is reported by The Moscow Times.
Taking into account the increase in prices, the drop in profits is about 15%. The overall result of loss-making companies also deteriorated significantly, increasing by 37,7% to 7,2 trillion rubles.
Problems in Russian business are explained by the increase in costs for raw materials, components, labor, as well as increased tariffs and the complexity of logistics chains. As a result, the cost of production is increasing, which negatively affects the Russian economy.
One of the main factors contributing to the worsening economic situation is high lending rates and Western sanctions, which complicate international trade and reduce demand for products. At the same time, the Russian central bank notes that its policies help Russian businesses limit costs by raising the key rate and curbing inflation.
Among the most affected sectors are trade (profits down 39%), finance (-18%), energy and utilities (-35%). In the coal industry, companies are suffering significant losses, amounting to over 100 billion rubles.
Declining corporate profits were one of the reasons for the Central Bank's unexpected decision not to raise the key rate in late December. It could signal a cooling in economic activity, as it limits companies' opportunities to increase demand for factors of production, including labor, central bank officials said during the discussion.
At the same time, despite the decline in profits, income tax revenues in 2023 increased by 1,6% to 8,1 trillion rubles. This was made possible by the increase in tax rates on income from securities in the Russian Federation.
