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y/y respectively).
"Our 2020 estimate of industrial production looks a little too optimistic," chief economist of BCS Global Markets Vladimir Tikhomirov wrote on July 17.
"In the coming months, we expect to see a gradual improvement in industrial dynamic, albeit we admit that the pace of recovery is likely to lag our expectations," Tikhomirov notes.
BCS GM previously estimated that in 2020 industrial production in Russia would fall by 2.7% y/y, but with the 1H20 data "this might be a challenging target to meet if the industrial dynamic remains sluggish in the future as well," BCS GM warns.
IHS Markit previously expected Russia's industrial output to decline by 7%, RBC business portal reminds on July 17. Analysts surveyed by RBC note that prolonged stagnation in the industry amplifies the risks for Russian labour market, with the largest employers forced to cut costs.
4.2 Inflation
In June, Russian inflation rose to 3.2% y/y from 3% in May. A pause in rate cuts becomes more likely. A gradual return of the economy to more normal functioning after two months of quarantine led to increased consumer demand last month, a trend that is continuing in July as well.
This, along with the recent devaluation of the ruble and uncertain outlook for the vegetable harvest this year, could lead to rising inflationary pressures and a continued growth in annualized inflation.
31 RUSSIA Country Report August 2020 www.intellinews.com
