Business seeks public engagement
In June 2022, the sales activity among Small and Medium-sized Enterprises (SMEs) in Russia showed signs of stagnation, with the RSBI index signaling a minor increase of 0.1 percentage points to 51 points at the end of the second quarter. This marks the first stagnation in over two years, according to reports from the Higher School of Economics and the Bank of Russia.
The credit component remained at a historically low level in June, with the credit component standing at 56.1 points. This stagnation in credit availability, coupled with reduced government support, has likely dampened SME investment capacity. The Bank of Russia noted that while lending had accelerated in prior years, monetary tightening and stricter regulations cooled credit growth to risky borrowers, affecting SMEs' access to credit.
In June, the share of approved loans increased by 2 percentage points (p.p.) to 13%, while the share of loan rejections increased by 1 p.p., to 10%. This indicates a cautious approach from lenders towards SMEs, with entrepreneurs reporting reduced access to financing due to high key interest rates.
The investment component remained near its May minimum in June, at 55.3 points. The data shows caution in entrepreneurs' investment plans, with the share of SMEs planning to increase business investments decreasing for the second consecutive month. Only 22% of SMEs planned to increase investments in June, a 2 p.p. decrease from the previous month. New investments are still unattractive for SMEs, with only 17% of companies increasing investments, below the average level of the past two years - 21%.
In terms of revenue, around half of SMEs still reported a decline in June. While 13% of SMEs reported an actual increase in revenue, this represents a 2 p.p. decrease from May. Entrepreneurs' expectations for an increase in sales are deteriorating, with only 26% expecting an increase, a 6 p.p. decrease from May.
On a positive note, the labor component rebounded to a moderate growth rate of 52.9 points in June, after a dip in May. The Bank of Russia noted easing labor market shortages in June, with 18% of respondents reporting expanding their staff in June, a year-high and a 6 percentage point increase from May. However, clear conclusions about the sustainability of the hiring trend can only be drawn based on actual July personnel hiring data.
The overall narrative from reputable sources like the Higher School of Economics and the Bank of Russia indicates that SMEs in Russia have faced deteriorating conditions in sales, credit availability, investment prospects, and labor market stability over the period following 2022, with challenges intensifying by mid-2025. While data directly from PSB, OPORA Russia, and NAFI for June 2022 was not found, this consolidated external context provides valuable insights into the challenges faced by SMEs in Russia during that timeframe. For more precise June 2022 data strictly from those organizations, additional direct reports from those institutions would be needed.
The stagnated credit availability and reduced government support could have adversely affected the personal-finance of small-business owners, as they grapple with high interest rates and diminished investment capacity. Consequently, financial management within these small-businesses might become challenging, given the deteriorating sales, credit availability, investment prospects, and labor market stability over the period following 2022, as reported by the Higher School of Economics and the Bank of Russia.
