Russia: Industrial output shrinks at sharpest rate in over a decade in May
Industrial output shrank 6.6% year-on-year in April (March: +0.3% yoy). April’s result marked the sharpest contraction since October 2009 and was chiefly driven by the constraining impacts of the Covid-19 pandemic.
The downturn was largely driven by a sharp deterioration in manufacturing output. In addition, mining and quarrying output contracted for the second consecutive month in April. Similarly, activity in both the electricity, gas, steam and air conditioning supply, and water supply and sewage sectors shrunk at the outset of Q2.
On a seasonally-adjusted monthly basis, industrial production dived 5.7% in April (March: -1.1% mom). Meanwhile, the trend pointed down, with the annual average change of industrial production coming in at 1.2%, down from March’s 2.1%.
Commenting on the result, Dmitry Dolgin, chief Russia economist at ING, noted that despite a softer-than-expected contraction in April, the economic outlook remains grim:
“While we generally welcome the above-consensus performance of the industrial production and find it reasonable, we still see several risk factors that may constrain the eventual recovery in industrial output […] As a result, for now we continue to expect a sizeable 4.5% YoY drop in industrial production this year, with only a modest 2.0% recovery in 2021. Our GDP forecast remains above-consensus at -2.5% YoY, on expectations of additional fiscal support and substitution of foreign travel with local consumption by the top earning households, however the risks to this view are skewed to the downside at the moment, especially in case of a slower-than-expected recovery in 2H20.”