Page 5 - RusRPTNov20
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1.0 Executive summary
Russia’s economic recovery stalled in at the end of September and looks like it will continue to slow as a second wave of the coronavirus (COVID-19) epidemic gathers momentum.
The infection rate took off dramatically in the last week of September as the autumn weather arrived and people went in doors. By the end of October the daily infection rate was setting new records and the second wave is going to be more sever than the first. As of the last week of October the health ministry reports that hospitals are 90-95% full in 22 of Russia’s 85 regions.
Mayors are desperately trying to avoid another growth crushing lockdown, but most have already imposed a lockdown-lite. School’s half term break was extended. Police are now aggressively enforcing mandatory mask- and glove-wearing rules. Tracking systems using mobile phones have been introduced. And OAPs have been ordered to stay-at-home again.
The impact of the new wave is already visible in the statistics. Retail foot traffic has already begun to fall noticeably and that will affect the upcoming retail turnover figures. Part of Russia’s relatively good performance has been the rapid bounce back in retail after restrictions were lifted in the summer. That lead, among other things, to the International Monetary Fund (IMF) improving its growth forecast for this year from a 6.6% contraction to a 4.1% contraction in October. That may now prove to be overly optimistic.
The recovery in industrial production also dragged on in September, driven by the processing industry. In the extractive industries, the recovery continued, but at a more moderate pace. However, industrial production statistics were revised upwards in September for this year and last.
In the light of the new figures, industrial production contracted by only 3% year-on-year in January-September, almost 2 percentage points less than previously estimated. In particular, production of machinery, equipment and means of transport has declined more moderately than previously estimated. Such a major revision is also likely to raise GDP slightly in the early part of the year.
Agricultural production continued to grow in September, as throughout this year, but growth slowed to one per cent. Construction output remained at the same level as a year earlier. In recent months, however, housing construction seems to have become the driving force behind construction production, growing by 6% year-on-year in July-September after a sharp drop in the spring.
5 RUSSIA Country Report November 2020 www.intellinews.com
