Page 51 - RusRPTJan21

4.0​ Real Economy 4.1​ Industrial production
Russian IP surprises as pharmaceutical industry makes comeback in November​. The contraction in industrial production (IP) surprisingly shallow in November to 2.6% y/y vs. 5.5% y/y in October and 3.6% y/y in September. Bloomberg consensus anticipated a contraction of 4.9% y/y.
Industry-wise, the most significant improvement occurred in manufacturing (+1.1% y/y vs. -3.7% y/y in October). Mining and quarrying also improved (-6.8% y/y vs. -8.6% y/y in October) thanks to the better performance of the non-energy sector (coal, metal ores and other minerals). Electricity, gas, steam and AC remained near their October levels, while water supply saw a drop.
On an m/m SA basis, IP added 1% m/m, with mining and quarrying up 1.8% m/m. Manufacturing posted a decline of 0.6% m/m. Electricity, gas, steam and AC were down 0.2% m/m, while water supply was down 1.2% m/m.
“The surprising improvement in IP in November was mainly due to the pharmaceutical industry, which was up 35.5% y/y after a near-zero level in October. In our view, the previous month was an exception from the trend, as medical production was up 21-37% year-on-year,” Sova Capital said in a note. “The resurgence in the industry could be related to the start of vaccine production. Within manufacturing, refining also helped to ease the contraction (-5.8% y/y), which returned to pre-October levels. Fabricated metal production, computers and electronics, as well as other machinery and equipment, also performed better.”
Overall, the epidemiological situation did not lead to a severe deterioration in IP, although consumer indicators will be released later this week. The pharmaceutical industry will likely support IP until the end of the year, while other sectors could see a further recovery. We see upside risks to our IP growth forecasts of -5.6% y/y in 4Q20 and -3.8% y/y for FY20.
51 ​RUSSIA Country Report​ January 2021 ​ ​www.intellinews.com