A stopcock for investments: why investments in the Russian economy are falling
Investment activity in Russia is in a state of stagnation with signs of increasing decline. The main drivers of the economy remain household consumption and budget spending, while investment is in some ways a weak spot limited by expensive loans, low profitability and structural problems. These are the results of the next monthly analysis of macroeconomic trends published by the CMACP. Experts interviewed by Izvestia believe that the rapid growth of investments in the last couple of years is coming to an end, but they pin some hope on a reduction in the key interest rate.
At the level of 2022
According to the CIMAC review, investments in fixed assets decreased markedly in the second quarter of 2025: -1.4% compared to the previous quarter (after an increase of +2.5% in the first quarter). Stagnation is observed. Investment activity continues to decline and has approached the bottom level of 2022. It has already passed ⅔ of the way from the peak values of mid-2024. In general, according to the CIMAC, if the current trend continues, in a few months the anti-record of recent years, set in 2022 as a result of the imposition of sanctions, will be surpassed. This time, the reason is the ultra-tight monetary policy.
There are several reasons for this process. First, there is a decline in production volumes, which forces companies to spend less on future development. Secondly, the burden of interest payments on company revenues is high. According to the CMACP, it has updated the historical maximum — over 35%. Construction, woodworking, and the automotive industry remain the most problematic sectors. In this situation, there is also not an infinite amount of free money.
In addition, investment activity is limited by high interest rates with low profitability, the uncertainty of the economic situation (which is noted as the reasons for the decline of more than 70% of enterprises), a shortage of demand in the domestic market, as well as a decrease in imports of investment goods, which indicates a crisis in investment demand.
Return to normal
As Sergey Drobyshevsky, chief researcher at the Gaidar Institute, commented on the situation, the CMACP data primarily indicate the completion of the phase of rapid investment growth that we observed in the second half of 2022-2024, and not some kind of crisis in this area.
— From the middle of 2022 to 2024, the entire economy of the Russian Federation (this is reflected by the growth rate of GDP, the output gap, the dynamics of investment in fixed assets, the growth of real wages, and changes in the unemployment rate) was in a state of "overheating" (above the level of long-term sustainable growth rates). Since the end of 2024, the indicators have been returning to their long—term average values, which suggests a noticeable slowdown in dynamics, the expert notes.
According to him, this fully applies to investments in fixed assets. In particular, if you look at the graph of the investment activity index, you can see that its current indicator is approaching the level of investment activity in 2019, a fairly prosperous year before the pandemic.
"Accordingly, by the end of 2025, the growth rate of investments in fixed assets can be expected to be close to zero, but next year, in 2026, the decline in investment activity will stop, and some growth can be expected, although, of course, not at the same pace as in 2023-2024," predicts Sergey Drobyshevsky.
Andrey Melashchenko, Chief Economist at Renaissance Capital, notes: data from the Bank of Russia indicate that investment activity continued to grow in the third quarter of 2025.
"The regulator also confirms a slowdown in activity growth, but surveys of enterprises indicate their plans to maintain the current pace of investment in the fourth quarter of 2025," he states.
Damage to construction and engineering
Kirill Lysenko, an analyst for sovereign and regional ratings at Expert RA, highlights construction, mechanical engineering and all their related industries, including the production of building materials, metallurgy, engineering, and mining of minerals required for construction.
"However, here it is necessary to single out industries that are closely related to the technological chains of the military—industrial complex in a separate cohort - there the impact of tight monetary policy is much less pronounced," he points out.
Drobyshevsky also notes that both the recession and the recovery of investment activity are predominantly frontal in nature, affecting not only industries related to final consumption, but also industries that are more or less focused on ensuring the country's defense and solving problems within the framework of their own.
Don't wait for an investment boom
How long will the recession be? According to Kirill Lysenko, an investment boom should definitely not be expected in 2025 and 2026.
— The further dynamics of investment demand will strongly depend on the presence of new inflationary and geopolitical shocks, which will affect the rate of rate reduction by the regulator. As long as the market rates are much higher than the internal rate of return of many potential investment projects of companies, investments in a significant proportion of industries will be more likely to be of a substitute nature, that is, aimed only at not decreasing the stock of fixed assets, the expert believes.
At the same time, he adds that it is necessary to take into account the presence of lags in the impact of PREP mitigation: the effects do not appear immediately, but accumulate through many channels. Moreover, through some channels, the accumulation lasts almost 1.5 years.
In turn, Sergey Drobyshevsky notes that the high key rate of the Central Bank of the Russian Federation in these conditions has a signaling character, giving a start to the process of completing the growth cycle.
— This is happening because inflation is also largely related to the overheating of the economy. As the economy enters a long-term growth trajectory, inflation, followed by the key interest rate, will decrease. This will provide more favorable conditions for investments. However, the first role will be played not by the cost of borrowing, but by the growing need for new investments for further development, after the investments made during the boom period are fully involved in the current production process," concludes the Izvestia interlocutor.
Investments in fixed assets are mainly carried out at the expense of companies' own funds, so their dynamics are less sensitive to tightening monetary conditions, Melashchenko points out.
— However, a further reduction in the key rate will certainly support the growth of investment demand both directly, reducing potential interest costs, and indirectly (less tight monetary conditions means more consumer demand in the economy, which means more profits and more incentives to expand production). This is confirmed by surveys conducted by the Bank of Russia, in which respondents point to economic uncertainty, limited equity and restrained demand as limiting factors," the expert concludes.
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