Page 17 - RusRPTAug22

and railway equipment - but these industries are mainly focused on the domestic market.
The most import-dependent sectors of the Russian economy - motor transport, electronics, pharmaceuticals, IT, mining services - are simultaneously sources of pro-inflationary risks, follows from the assessments of the Central Bank's Research and Forecasting Department (the conclusions may not coincide with the official position of the regulator). Import substitution will reduce the manufacturability of production in these industries, Central Bank analysts warn. However, in general, according to their findings, the dependence of most Russian industries on intermediate imports is relatively low by world standards. The situation is worse with investment imports (dependence on which is probably higher than on intermediate imports), but analysts have not yet assessed it.
Despite modest progress in import substitution over these eight years, Vladimir Putin continues to believe in it. “We need to be one step ahead, create our own competitive technologies, goods and services that can become new world standards,” he described the goals of import substitution at SPIEF a month ago. But the paradox noted by Dmitry Belousov suggests the opposite: Russia cannot build its own competitive industry without imports. All that remains is to "rely on one's own strength in the spirit of the Juche idea," which Putin so badly wanted in 2007.
2.5 Falling power consumption indicates economic slowdown
Decrease in electricity consumption by industry — the most important indicator of economic slowdown — is becoming a trend in Russia. Business definitely reduced electricity consumption in June (for the first time since the start of the "special operation" in Ukraine) and, it seems, in July, Kommersant writes, citing data from system operators and experts' calculations.
The wholesale market is structured differently than the retail market: companies pay both for capacity - in fact, for the possibility of selection, expressed in gigawatts, and for the electricity consumed - in kilowatt-hours.
In June, the peak consumption of commercial consumers in the first price zone (the European part of Russia and the Urals, 80% of the country's consumption) fell by 4% y/y to 56.8 GW. In July, the decline in demand in this zone continued: minus 1.2%, 30bn kWh. In Siberia, energy consumption was growing.
Consumption is reduced by the auto industry, metallurgical enterprises and petrochemical companies, sources say. More and
17 RUSSIA Country Report October 2020 www.intellinews.com