​Industrial production to grow fast this year

RUSSIA ECONOMICS - In Brief 15 Apr 2021 by Alexander Kudrin

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Rosstat reported that even though the mining segment remained under pressure due to the OPEC+ deal and in 1Q21 contracted by 7.3% y-o-y, in March contraction was not so deep as the extraction of gas, coal, and metal ores were up y-o-y. Starting from May, y-o-y growth in the mining segment will turn positive. Manufacturing performed much better and was up y-o-y by 4.2% in March and by 0.9% in 1Q20. A much stronger growth y-o-y is expected going forward due to a low base effect in 2Q20.Growth in manufacturing was uneven though. Relatively poor production of construction materials indicates that construction activity remained sluggish. It could be however attributed to a very cold winter in Russia and will catch up later in the year. Food production looked almost saturated and growth was weak. However, the textile and clothing sector delivered strong growth. Most of the machine-building sectors also delivered rather impressive results. Production of cars, for instance, was up by 13.2% and 32.3% y-o-y in 1Q21 and March respectively. The pharmaceutical sector outperformed as well.The industry as a whole grew by 1.1% y-o-y in March and contracted by 1.3% y-o-y in 1Q21. Seasonally adjusted industrial output in March was up 0.7% m-o-m. The trend is very positive and a very strong industrial growth is expected this year. It could well exceed 5%. Earlier, a very good non-oil-and-gas tax collection in March indicated that economic recovery, including industrial growth, continued, and a weaker ruble provided support for manufacturing.Evgeny GavrilenkovAlexander Kudrin