Page 8 - RusRPTJul21

2.0 Politics
2.1 Russia’s economy recovering, but different sectors
going at different speeds
Russia’s economy has been bouncing back from the coronavirus (COVID-19) pandemic well and industrial production was up a strong 11.8% in May year-on-year, but drilling into the details and different sectors are recovering at very different speeds, says Bank of Finland Institute for Economies in Transition (BOFIT) in its weekly update.
“Manufacturing activity, when measured in the real volume of gross value added produced (GVA), has been quite flat since summer 2019 and showed hardly any downward impact from the Covid Recession last year. Over the longer term, manufacturing has experienced rather steady growth, with the GVA volume increasing by about 20 % since 2011,” BOFIT said.
“In contrast, the GVA volume in the minerals extraction industries (including oil & gas) in the first quarter of this year was on par with the 2011 level, and about 14 % lower than its 2019 peak. The reduced volume largely reflects the OPEC+ agreement on production ceilings requiring cuts in Russia’s crude oil production,” BOFIT added.
Retail sales were initially hurt by the appearance of the pandemic as foot traffic to the main shopping malls collapsed. However, retail sales rapidly bounced back as the population switched en masse to shopping on line. The pandemic has proven to be a significant catalyst for e-commerce and Russia’s e-commerce is booming as a result.
“The wholesale & retail branch has recovered to a notable degree from spring 2020. So much so that the GVA volume already in the second half of 2020 was only some 2 % less than in 2018 and 2019. In the first quarter of this year, the figure was slightly above zero. However, the recovery in wholesale and retail from the deep contraction of 2015−2016 has yet to occur. The branch’s GVA volume is still 10 % lower that its 2012−2014 peak and 5 % below its 2011 level,” BOFIT said.
Transport was also hurt as supply chains collapsed, but the sector was also hit by the problems in oil and metal deliveries where supply chains were disrupted and investment activity fell heavily during the pandemic.
“The transport and warehousing branch contracted over the past two years, a reflection of the weak performance of trade and oil production cuts that have reduced the volume of oil transmitted by pipeline. The branch’s GVA volume is still 10 % less than its 2018−2019 levels and about 3 % below its 2011 level, which to some extent may reflect logistical improvements in transport and distribution. While construction activity did not decline during last year’s Covid
8 RUSSIA Country Report July 2021 www.intellinews.com