Page 27 - RusRPTSept20

Source: Rosstat, BCS GM
4.1 Industrial production
Russian industrial production was down 8% y/y in July, slightly improving compared to the 9.4% y/y contraction in June.
For 7m20, output was down 4.2% y/y. In seasonally adjusted terms, it was up 1.5% m/m in July, the first m/m uptick since February.
Mining and quarrying remained weak, with output falling 15.1% y/y in July versus a 14.1% y/y contraction in June (down 6.6% y/y in 7m20), as the OPEC+ production cuts continued to impede the overall recovery.
Meanwhile, other segments like manufacturing and electricity, gas and heat improved in July, the former down just 3.3% y/y in July versus down 6.4% in June (down 2.5% y/y in 7m20) and the latter down 2.6% in July versus down 4.8% in June (down 3% in 7m20).
On a seasonally adjusted basis, manufacturing output rose 4.3% m/m in July, we estimate, compared with 0.3% m/m growth in June.
The July numbers were mixed across subsegments. On the one hand, production of wood products, chemicals, clothes, electronic equipment and cars started to return to normal levels. The decline in metallurgy eased y/y. On the other hand, subsegments that had been growing strongly in previous months showed a deceleration. One was food product production, which declined 0.8% y/y in July versus 4.5% y/y growth in June and 5.4% y/y growth in 7m20. This was partially offset by a jump in beverage production (up 11.9% versus up 2.9% in June, up 2.3% in 7m20). Drugs and medical equipment saw production growth decelerate to 7.6% in July from 36.8% in June (up 16.3% in 7m20). Metal product output slid 14.8% y/y after 2.2% y/y growth the month before (down 3.9% y/y in 7m20).
Overall, the data shows that production in those sectors affected most by the pandemic is gradually returning to more normal dynamics. The gradual recovery of domestic and foreign demand should provide additional support for manufacturing. Russian companies in non-energy sectors proved quite nimble in adopting to the new environment, as manufacturing exports continued to grow in April-May, just at a slower pace than earlier in the year (see our latest Russia Economic Monthly for more details). As the oil production cuts have been eased starting this month (the second phase of the OPEC+ deal kicking in), this will support the mining and quarrying sector and industrial production as a whole.
27 RUSSIA Country Report September 2020 www.intellinews.com