Page 46 - RusRPTNov22

4.0 Real Economy 4.1 Industrial production
Industrial production extended its decline in September. It contracted by 3.1% y/y vs 0.1% y/y in August – noticeably worse than 1% y/y decline expected by consensus.
Manufacturing, which fell 4% (vs -0.8% y/y in August) was the main contributor to the contraction in the headline industrial production figure. Another negative development is that mining, which supported economic output for three consecutive months, synchronized with manufacturing and pulled production down in September (-1.8% y/y vs +1% y/y in August).
On seasonally adjusted basis, Rosstat reported, that the headline industrial production was down 0.4% m/m vs 0.9% decline in the previous month.
Expecting further acceleration in industrial production decline. Strong 5.1% y/y growth in 1Q22 still allows the industrial production to remain in the positive territory printing a 0.4% y/y growth for 9M22
However, a number of domestic and external shocks intensifying in 4Q22 is expected to lead to a 2.2% y/y contraction in industrial production for the full year.
The only support is expected from ongoing significant budgetary expenses, but given their high concentration on national security (with low multiplier effect) we do not expect a resilient and steady economic and production recovery in the short-term.
Industrial production in Russia has returned to the last-year level after a four-month decline, President Vladimir Putin said on October 6 at the meeting on economic matters. "The industrial output has returned to the last-year level after the four-month drop. Industries that faced the most challenging situation, such as the automobile industry and the metals industry, are gradually recovering," the President said.
The agricultural sector shows good dynamics, having shown a 4.6% increase in January - August, the head of state said. "Construction also scales up. The construction work volume moved up by 7.4% in August against the like period of the last year. Such advanced dynamics of the construction sector should also bring up other related industries, provide them with an extra impetus," Putin added.
46 RUSSIA Country Report November 2022 www.intellinews.com