Russia: Russia's industrial production contraction is worse than expected
May 20, 2015
In April, industrial production plunged 4.5% over the same month last year, which followed a milder 0.6% decrease in March. Although most analysts had anticipated the drop in April’s industrial output would show a deterioration compared to that of March, the reading was worse than the 1.1% decline expected by them. April’s print, which marked the fastest contraction in five and half years, reflected a collapse in manufacturing production, a contraction in mining and quarrying, but an expansion in the production of electricity, gas and water. According to most analysts, manufacturing production deteriorated sharply due to the recent strengthening of the Russian ruble.
Sequential data corroborate the sharp deterioration suggested by the annual data. Industrial production contracted a seasonally-adjusted 1.6% in April over the previous month. The reading contrasted the 0.4% increase registered in March.
The overall trend suggested that Russia’s industrial production lost steam rapidly at the outset of the second quarter. The annual average growth in industrial output declined from 1.3% in March to 0.7% in April.
Author: Ricardo Aceves, Senior Economist