Russia: Plunge in industrial output worsens in December
January 25, 2016
The continued deterioration in Russia’s industrial production appeared to have slowed in recent months, but in December it experienced a drastic fall. Industrial production plunged 4.5% over the same month of the previous year, which came in below both the 3.5% contraction observed in November and the 4.2% drop the markets had expected.
In December, a steep drop was registered in manufacturing production as well as in electricity generation. Conversely, mining and quarrying increased, which offset a drop in November.
A month-on-month comparison showed that industrial production fell a seasonally-adjusted 0.2% in December, which followed a 0.6% decrease in November.
With the exception of January, Russia’s industrial production contracted through the whole 2015, with the sharpest decrease registered in May. In the full year 2015, Russian industrial production contracted 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.
Author: Ricardo Aceves, Senior Economist