21.07.22 Sanctions Review

The number of companies experiencing issues with import supplies has halved, but remains high, surveys of the Central Bank show

Over the past two months, many of the companies that were dependent on imported components and materials have either secured a new chain of supplies, or see the prospect of finding alternatives, shows the survey of 14 thousand enterprises throughout Russian regions, that was conducted by the regional offices of the Central Bank.

However, in most cases the change of supplier is accompanied by a rise in costs, causing higher end prices for the product, and an increase in delivery times, which leads to a reduction in stock availability of produced goods.

On the whole 70% of businesses throughout the economy stated that they did not experience issues with equipment or components import. There are 80–85% of such enterprises in construction, retail, services and agriculture; 50–57% — in heavy engineering, metallurgy and railway transport, 40% — in pharmaceuticals.

Accordingly, the share of enterprises that do experience problems with import substitution is still considerable (one-third of all businesses in the industrial sector). How fast this share is going to decrease will significantly influence the depth of the decline in the Russian economy.