Half of Small Businesses in Russia Report Revenue Decline

Half of small, medium, and micro businesses in Russia reported a decrease in revenue according to a survey conducted in July. Only 21% of companies noted an increase in income, while analysts assess the sales situation as critical. The share of companies expecting further sales declines rose from 34% to 37%, marking the highest level in the last 3.5 years. The Small and Medium Business Activity Index (RSBI) has fallen to its lowest level since the beginning of 2023 and has remained below 50 points for three consecutive months. The Central Bank's strict monetary policy, which maintains a high key interest rate, continues to pressure small businesses. Consumers are shifting to a savings mode, and businesses do not expect a recovery in purchasing power in the second half of the year. The reduction of investment programs by large corporations is also negatively impacting small and medium businesses, which are losing contracts and facing payment delays. Business conditions are deteriorating, leading to a payment crisis: as of May 1, one in six small and medium enterprises had overdue debts. The share of problematic loans in the sector increased from 5.9% to 7.6%, while the default rate among micro businesses reached 10%. The total amount of loans in default over the past year amounts to 0.5 trillion rubles. Due to financial difficulties, businesses are closing en masse, leading to a crisis in business demographics in the country.

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