Russia Industry January 2016


Russia: Deterioration in industrial production lessens

February 15, 2016

The deterioration in industrial production observed in past months slowed at the onset of the year. Russia’s industrial output contracted 2.7% in January over the same month last year, which was less than the 4.5% plunge registered in December and was broadly in line with the 2.6% decrease that markets had expected.

January’s contraction stemmed from a decline in manufacturing output, although the contraction was slower than in the previous month. Meanwhile, mining and quarrying and production and distribution of electricity saw expansions in the first month of 2016.

A month-on-month comparison showed that industrial production expanded a seasonally-adjusted 0.4% in January (December: -0.1% month-on-month), which marked the first increase after three consecutive contractions.

Russia’s industrial production contracted through the whole of 2015, with the sharpest decrease registered in May. In the full year 2015, Russia’s industrial production decreased 3.4%, which marked the first contraction in six years. The slump, which also reflects the fact that the Russian economy reeled from weak oil prices and a sharp depreciation of the ruble, was worse than the drop in output of 3.3% the Economic Development Ministry had expected. Moreover, the Economic Development Ministry expects industrial production to continue contracting this year, although at a softer pace than last year. The Ministry sees industrial production falling 0.4% in 2016, considering an average oil price of USD 40.0 per barrel.

After industrial production suffered the worst contraction in six years in 2015, our panel of analysts is more optimistic than the Ministry of Economic Development regarding the outlook for industrial production. FocusEconomics participants expect industrial production to expand 0.6% in 2016. The projection is unchanged from last month’s forecast. FocusEconomics panelists expect industrial production to increase 2.0% in 2017.

Author:, Senior Economist

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Russia Industry Chart

Russia Industry January 2016

Note: Year-on-year changes and annual average variation of industrial production index in %.
Source: Federal State Statistics Service (Rosstat) and FocusEconomics calculations.

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