Russia's industrial performance looked encouraging in July amid some improvements in manufacturing

RUSSIA ECONOMICS - In Brief 17 Aug 2020 by Alexander Kudrin

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In the aftermath of some break caused by the lockdown in April and May, the Russian industry performed reasonably well in July. Though, mining was still under pressure due to deep contraction in oil production stipulated by the OPEC+ deal. Rosstat reported that oil and gas extraction in July was still down by over 15% y-o-y and by 6.4% in 7m20. However, coal and metal ores mining performed better – the latter even posted positive y-o-y growth both in July and in 7m20 (1.8% and 0.8% respectively). Mining in total was down by 6.6% y-o-y in 7m20.Manufacturing showed clear signs of recovery, particularly in the consumer-oriented sectors, such as car production, which was up by 3.9% y-o-y in July. The 7m20 tally, however, was still strongly down. Food and drink production remained steady, while textile and clothing production began catching up. The weaker ruble helped the latter. Overall, industrial performance remained rather uneven across its segments and by various products. However, signs of recovery have been seen last month in many cases. In July manufacturing was down by 3.3% y-o-y, which looked much better than around 8% y-o-y contraction in 2Q20. The 7m20 tally was down by 2.5%.It looks as though in 2020 as a whole, the Russian industry will deliver better results than it was anticipated a couple of months ago. Mining will contract by around 8-9%, while manufacturing may be down by a mere 2-3%. Note, that uncertainty remains high, which is indirectly illustrated by rather uneven performance across various segments. Hence forecast revisions are likely. The industry as a whole may contract by less than 6% (say, closer to 5%), which looks better than previously though...