Page 46 - RusRPTNov21

4.0 Real Economy 4.1 Industrial production
Russia’s industrial production for September printed +6.8% y/y, exceeding the Bloomberg consensus and our forecast of +4.6% y/y.
Adjusted for seasonality, IP jumped +1.7% m/m SA – the highest print since December – both according to Rosstat's and our own calculations.
The mining sector propped up September's IP rise, advancing +9.5% y/y / +3.3% m/m SA: the out-of-consensus growth was due to mining services provision (+27.5% y/y), in our view, whereas the overall acceleration (from +6.6% y/y in August) was also propelled by crude oil extraction (+8.1% y/y vs. +5.8% y/y) and natural gas mining (+11.7% y/y vs. +7.7% y/y).
Manufacturing industries added +0.4% m/m SA and advanced to +4.6% y/y in September: the improved both in annual and seasonally adjusted terms was concentrated in heavy industries (basic metals, metal products, electronics).
Analysts believe that the mining sector and investment-related industries within manufacturing are to keep up the positive momentum:
i) federal budget spending is shifting toward infrastructure (see our Federal Budget - Spending shifts from consumption to capital);
ii) crude oil extraction is set to gradually rise in line with OPEC+ agreements; and
iii) the global commodity shortages benefit Russian industrial production (which is already reflected in the BoP data, as the current account balance heads to new historical highs) and incentivise producers to increase output and, hence, to invest, which is already reflected in the mining services provision rising +27.5% y/y in September – this time due to Rosneft conducting geological drilling.
46 RUSSIA Country Report November 2021 www.intellinews.com