Two-thirds of respondents say the country offers long-term growth potential despite the short-term impact of sanctions

The majority of Western companies operating in Russia are not planning to leave the country, despite the challenges posed by sanctions, according to a new survey by the Association of European Businesses (AEB).

Many US, European, and Asian businesses exited Russia after the West imposed sweeping sanctions on Moscow over the escalation of the Ukraine conflict in 2022. Others left citing reputational concerns or fear of secondary sanctions. However, the annual poll from the AEB published on Monday indicates that most companies that stayed see long-term potential in the Russian market, despite Western restrictions weighing on short-term performance.

Of the companies surveyed by the AEB, 67% said they were not considering leaving, up slightly from 66% last year. Most respondents said their Russian operations remain a key part of their global business.

Companies identified opportunities such as market share growth (50%), business expansion (39%), and new customer segments (32%) as the primary reasons to stay. Over half (56%) said they are continuing investment projects, citing the Russian market's size, potential, and positive developments.

The survey showed that while short-term business confidence among foreign firms has dipped, longer-term expectations have improved compared to last year: 82% of respondents said they were anticipating significant growth within a decade, up from 66% last year.

The survey found that most companies have adapted to sanctions but still face challenges, including payment delays, reputational risks and reluctance from foreign partners to work with Russia-linked entities. About 87% said they were negatively affected by Western sanctions and Russian countermeasures over the past year, citing banking curbs, export-import restrictions, frozen assets, SWIFT disconnection, and software and transport limits. Some 71% said they don't expect any sanctions relief in 2025.

Still, 59% forecast turnover growth over the next three years, up from 53% in 2024. The AEB said its Business Climate Index has climbed to 127 points out of 200, steadily improving since falling to 80 points in 2022.

"[This] confirms that European companies in Russia have reached a certain equilibrium in the new economic reality," AEB CEO Tadzio Schilling said. "Business has entered a phase of stabilization - companies have adapted their operating models, found alternative supply chains and learned to work under the conditions of the remaining restrictions."

He added that the results reflect "business environment's stability," noting that despite the ongoing challenges and uncertainty, companies remain "cautiously optimistic."

The AEB represents more than 380 companies from EU states, the European Free Trade Association, and other foreign countries operating in Russia. This year's survey was conducted between April and May and included input from top managers at 100 member companies across various sectors.

(RT.com)