Industrial output is down in February y-o-y, but up m-o-m seasonally and calendar adjusted

RUSSIA ECONOMICS - In Brief 16 Mar 2021 by Alexander Kudrin

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As the Russian oil industry has still to comply with the OPEC+ deal, oil extraction remained suppressed in January and February (down by around 12% y-o-y in 2M21), while gas extraction was up by over 5% over the same period. As a result, the mining sector (including coal and metal ores) as a whole was down by 8.1% y-o-y in 2M21. Compared to February 2020 (which was a leap year) this result looks not too bad. In 2Q21 y-o-y growth numbers in mining will become strongly positive. In 2021 as a whole, mining is expected to expand by around 4.5%.In February and 2M21, manufacturing was down by 2.4% and 1.3% y-o-y, however, it is very likely that February numbers will be revised up next month, as consistently happened previously. As usual, trends were uneven across manufacturing segments, as some contracted (such as was in the case of some construction materials, metallurgy, and metal-working) while others demonstrated rather stable growth (in several machine-building industries, including agricultural machines, cars, and some other). Meanwhile, car production was up in February and 2M21 by 6.3% and 3.3% y-o-y.Industrial growth as a whole was supported by heat and power generation and by water supply as winter was cold in the country. The industry as a whole expanded by 1.3% m-o-m in seasonally-and-calendar-adjusted terms. Overall, these results are in line with expectations as in 2M21, Russia had fewer working days than in 2M21 (34 versus 36) which negatively affected manufacturing. Currently, GKEM Analytica expects that Russia’s industrial output will expand by over 3.5% in 2021.Alexander KudrinEvgeny Gavrilenkov