Russia showed a 4.6% year-on-year increase in capital investment spending in 2022, according to the latest report from RosStat statistics agency. An analysis by Kommersant daily suggests that investment activity was driven by a rush to “finish what was started”, meaning to urgently complete ongoing projects before the full effect was felt of the sanctions from Russia’s full-scale military invasion of Ukraine.

Despite previous reports that attributed all notable economic activity flashpoints to the military-industrial complex and the state spending on the war in Ukraine, the analysis of RosStat data by Kommersant claims that industrial construction was the main driver of investment activity in 2022.

In terms of types of investment, the biggest increases in 2022 have been in non-residential buildings and structures. The share of investments in machinery and equipment (presumably due to sanctions) declined, the share of investment in housings remained virtually unchanged, and computer and communication equipment investment fell significantly.

From a sector perspective, the growth points of 2022 were transport, mainly land and overland, professional activities of all kinds, warehousing and logistics, construction and wholesale trade. Strong growth was also seen in investment in chemicals and petrochemicals, but was less strong in metallurgy and oil and gas production. 

At the same time, the manufacturing sector saw a 6.7% decline in investment and for the automotive industry it more than halved. 

In terms of financing, state funding was not the main financing source of investment in 2022 (20% of total, up by 1.9 percentage point), while investments financed by bank loans decreased (down by 1.3pp to 9.7% of total) and so did investments from companies’ own funds (down 1.8pp to 54.2%). Foreign investments expectedly fell from 6.6% of total investments to 3.9%. 

Still, the share of private Russian investments in fixed assets in the Russian economy in 2022 remained high, rising to 55.5% from the 52.2% seen in 2011. 

“This increase in private investment can explain almost all of the investment growth, and it appears that part of the effect, so far poorly visible, is a shift of ownership from foreign owners to Russian owners, accompanied by private (non-banking) lending to buyers,” Kommersant suggests, noting that this trend should become clearer in 2023.