Page 31 - RusRPTAug19

4.0 Real Economy 4.1 Industrial production
Russian industrial output rose 3.3% in June, which brought 2Q19 growth to 3.0% y/y. After adjusting for seasonal and calendar factors, the m/m growth was 1.1%, fully offsetting the m/m decline of 0.8% in May.
Bankers believe the correction in May was a temporary and technical event after strong m/m growth in April (1.3%). The general trend in industrial production (including manufacturing) remains positive. In 1H19, industrial production rose 2.6% y/y. Sberbank expects annual growth at 2.5%.
The breakdown showed the growth in June was attributable mostly to manufacturing, which grew 3.4% y/y in June after a 1.0% y/y contraction in May. It was up 2.4% y/y in 2Q19 and by 1.9% in 1H19. Among sectors, there was some improvement in the output of construction materials (cement and glass) and cars, while the positive trend in the output of wood products and some electrical equipment continued.
Growth in mining and quarrying output eased to 2.3% y/y in June from 2.8% in May. It was up 3.3% y/y in 2Q19 and 4% in 1H19. Production of electricity, heat and steam was up 2.5% y/y in June from 1.8% in May (flat in 1H19). Meanwhile, water supply, sanitation and waste collection shrank 1.8% y/y in June after 0.8% growth in May (up 1.5% in 1H19).
4.2 Inflation
Russia’s trend inflation decelerated to 5.42% in June from 5.55% in May thanks to a shift in the balance of temporary inflationary factors to the disinflationary side, the central bank said in a report on July 10. Trend inflation shows that inflationary pressure on the consumer market is at a level close to the inflation target of 4%, the regulator said. Sberbank’s chief economist says
31 RUSSIA Country Report August 2019 www.intellinews.com