Page 55 - RusRPTAug22

depressed and show no sign of a turnaround. Our provisional assessment is that Russian GDP contracted by 9% q/q in Q2 and we think the economy will experience another, albeit smaller, decline in Q3,” Capital Economics said in a note.
Despite the headline fall, Rosstat’s seasonal adjustment showed that output was flat month-on-month. The slump in manufacturing deepened to 4.5% y/y while there was a surprising pick-up in mining output from -0.8% y/y in May to 2.3% y/y in June, Capital Economics reports.
The good results tally with the latest International Monetary Fund (IMF) outlook for Russia that said the economy was doing better than expected and the Fund upgraded its outlook for this year to a 6% contraction from its earlier estimate for a 8% contraction. The CBR also upgraded the outlook for this year to a 5% contraction, while its monthly macroeconomic survey of professional economists put the contraction at 6% this year.
Drilling into the details, gas production fell significantly to 39.3bcm in June from 49bcm in May, which was the month when Gazprom reduced flows of gas to Europe by 60% as part of the ongoing gas war with Europe. That number will fall again when the data is updated for July as Gazprom has reduced gas flows further to 20% of capacity in the Nord Stream 1 pipeline in the last week of July. Russian gas production is now 23.3% lower than in June 2021, reflecting the gas cut-off of the EU.
The lower gas production was also reflected in the earnings from gas which tumbled 40% m/m in June due to Gazprom’s self-inflicted gas war damage. In volume terms, Russia exported 10.9bn cubic metres in June, down from 12 bcm in the previous month. In contrast, it shipped 15.7 bcm in May and in June in 2021.
Oil production, on the other hand, has begun to recover as countries like India and China step into the beach left by traders that self-sanctioned and stopped buying Russian oil after the war in Ukraine started in February. However, export volumes are still down, although export earnings from oil are up: oil exports sank by 13% from May to June, from 18.9mn tonnes to 16.5mn tonnes, but revenues grew from €10.2bn to €10.5bn and are higher than for the same period in 2021.
“From the partial breakdown we estimate that oil and gas production rose by 3.5% in seasonal adjusted m/m terms. There is no granular split but this seems to reflect higher oil production as Rosstat reported that production of combustible natural gas was down 23% y/y in bcm terms in June.”
The slow down also hit the related chemical and petrochemical sectors where ammonia production tumbled 21% and potash was down 32.1%.
55 RUSSIA Country Report October 2020 www.intellinews.com