In August, Russian industrial production posted a 7.2% year-on-year decline. August brought the 8M20 dynamic to -4.5% y/y.
The data matched the BCS GM forecast (-7%), but was lower than the consensus estimate (-6.2%). In seasonally adjusted terms, output in industry improved from -7.3% y/y in July to -7% last month.
Oil and gas sector remained the main drag on industrial growth: in August, production of crude oil and natural gas fell 12% y/y, which pushed output in the resource sector down by 11.8% y/y. Contraction in the other two main segments of industry was much smaller: manufacturing industry fell by 4.1% y/y in August, while output in utilities was down by 3.6% y/y. Apart from O&G, the other industrial segment with a major contraction was automotive (car production fell by 30% y/y). At the same time, a few industries posted y/y growth, including food processing, chemical, textile and pharmaceutical.
“Recovery in Russian economy is slow, as expected. Overall, industrial data has confirmed our expectations: we forecast that the recovery in Russian economy in 2H20 will be slow and uneven as risks of a new wave of [the coronavirus [COVID-19)] pandemic continue to weigh heavily upon domestic consumer and business demand, while many parts of the global economy remain stressed. We reiterate our 2020 estimate of Russian GDP growth at -3.8% y/y,” BSC Global Markets chief economist Vladimir Tikhomirov said in a note.