Russia: Industrial output contracts at sharper pace in October
Industrial production dived 5.9% year-on-year in October (September: -3.6% yoy). October’s reading was chiefly driven by a deterioration in manufacturing output which fell at the sharpest pace since May. Moreover, mining and quarrying output continued to fall at a sharp pace. Notably, the result was affected the adverse calendar effect.
On a seasonally-adjusted monthly basis, factory output was flat in October (September: +0.1% mom). Meanwhile, the trend pointed down, with the annual average variation of industrial production coming in at minus 2.2% in October, down from September’s minus 1.3%.
Commenting on the result and economic outlook, Dmitry Dolgin, chief Russia economist at ING, said:
“We do not tend to take the October data as a sign of deterioration in industrial output trends and expect the 2020 drop to be limited, within a 3.0-3.5% range. We also find it unlikely that this strengthens the case for any additional easing on the monetary or fiscal side after a 200 bp cut in the key rate YTD and a 4% of GDP fiscal package announced for this year. Nevertheless, we see several challenges and risk factors that could further hamper any industrial recovery in the medium-term […] Overall, although it appears that the industrial output drop in 2020 could be shallow, the prospects of full recovery to pre-2020 levels seem distant.”