In may, industrial production fell by 9.6% in annual terms, and in the five months since the beginning of the year ‒ by 2.4%, according to Rosstat. This was influenced by including restrictions due to mers, explained the service. Fall rate of industry began in April and by 6.6% in annual terms, while in March still remained a small growth of 0.3%.
In may, Rosstat recorded a decline in all indicators of the main sectors. The largest decline occurred in the primary sector: mining decreased by 13.5% per annum, while in April the decline was only 3.2%. This is mainly due to limitations in oil production that involves the transaction of OPEC+, explains Rosstat. Water supply, treatment and power generation declined by 10.9%, 7.2% and 4.1% per annum respectively. In the treatment, as the most important for production and employment group, the situation is still serious, but there are hints of the passage of the bottom of the drop decreased from -10% in April, says chief economist at ING in Russia and CIS Dmitry Dolgin.
A decrease industry could be even more significant, but some industries have adapted to the new conditions, which partially offset the decline in April, Rosstat explains. A slight recovery in may, in addition to oil, wrote analysts says. Per month increased PMI, which Markit expects IHS: it amounted to 36.2 points after April’s 31.3 points, although its values remain at the lowest levels since 2008.
Some of the industries whose work is not stopped, was able to increase production. Among these is the production of chemicals (4.4%) and drugs (22.4%). But greatly reduced, for example, the production of cars ‒ more than 42% per annum.
The decline industry has surpassed the expectations of analysts. This is due to the significant uncertainty of the projections in the current environment, the Director of the financial centre “SKOLKOVO” – NES Oleg Shibanov. And in many respects with Russia’s implementation of commitments to reduce oil continues Dolgin: the oil and gas production fell by 14.3% in annual terms. Another factor is the deterioration in the dynamics of production in the food industry due to the passage of the wave of excessive demand, says the economist.
But the final figures of industrial production does not look “horrible” compared to other countries, emphasizes Shibanov. It can be a gradual slow recovery, he believes, since even in China the numbers have not yet returned to the levels before the pandemic. While the structure is in almost all manufacturing sectors except food and oil, there is some improvement, says Dolgin, but it is rather associated with the easing of restrictions since mid-may. Secondary effects from the likely decline in household income and consumer demand will limit the recovery of the industry in the future, he said.