Decent rate of industrial growth in October amid high inflation and decelerating credit growth

RUSSIA ECONOMICS - In Brief 24 Nov 2021 by Alexander Kudrin

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Industrial performance was good enough in October. Rosstat reported that industrial production was up y-o-y by 7.1% in October and 5.0% in 10M21. Seasonally and calendar adjusted by Rosstat m-o-m growth was positive (0.8%). The mining sector grew y-o-y by 10.9% and 3.7% over the same periods, while similar y-o-y numbers for manufacturing looked reasonably good as well (4.5% in October and 5.2% in 10M21. The y-o-y growth in the mining sector is on the rise amid strong low base effects, while growth in manufacturing is gradually decelerating as the impact of the 2Q20 lockdown on manufacturing was short-lived. The mining sector remained under the pressure of the OPEC+ deal for a longer period. The industry continues to grow across the vast majority of its sub-sectors and is entering the next year with positive dynamics.Later, however, some production activities will decelerate as the government stimulus will either fade or cease to exist next year. Car manufacturing, for instance, will decelerate next year amid higher interest rates and slowing credit growth. The impact of a short lockdown earlier this month is yet to be seen. Still, the industry as a whole is likely to expand next year by at least 3%.Consumer credit growth is gradually decelerating as the CBR reported that total non-overdue outstanding household debt to banks grew in October by 1.6% m-o-m, i.e., well below over the 2.0% average m-o-m growth seen in a mid-year. Meanwhile, the overdue household debt grew last month by 1.3% m-o-m, which was much faster than previously. Total banks’ claims on households, such as overdue and non-overdue loans combined with the non-overdue rights of claims acquired by banks, r...