Industry contracts in April amid the lockdown, but with now surprises

RUSSIA ECONOMICS - In Brief 21 May 2020 by Alexander Kudrin

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According to Rosstat Industrial output contracted in April by 6.6% y-o-y and 9.2% m-o-m, which can be treated as a relatively good outcome compared to many other countries. In March, for instance, the industry in the EU and Euro area posted double-digit dive both in y-o-y and m-o-m. Note that in April Russia had a full month of “non-working days”, while March was the starting point of the lockdown in many European countries in which it was introduced either in mid-month ore a bit earlier. Meanwhile seasonally and calendar adjustment industrial output contracted in Russia in April by 5.7% m-o-m. The 4m20 tally posted 0.6% y-o-y contraction.Mining contracted by 4.6% m-o-m and by 3.2% y-o-y, while the 4m20 tally posted 0.8% y-o-y contraction. Respective numbers for manufacturing are 11.9% m-o-m, 10.0% y-o-y and the 4m20 tally was up by 0.1% y-o-y.These numbers indicate that industry is set to decline this year by around 4%-5% (less in mining and more in manufacturing) but to provide more accurate and reliable forecast numbers the effect of easing of the restrictions orchestrated in May is yet to be seen.Overall, industrial output numbers hint that some speculations about nearly 30% contraction of economic activity in April (be in m-o-m or y-o-y) may not be justified, as industry represents quite a significant chunk of Russia’s GDP. Some sectors, such as agriculture might have even posted growth in April as the sowing campaign began earlier this year.Earlier Rosstat announced that in 1Q20 GDP was up by 1.6% y-o-y, but no details were provided. This number didn't raise an eyebrow.In the next report, GKEM Analytica will provide more color on the economic performance in April...