Russian macro: industry shows signs of stabilization
Almost every day the media quotes all sorts of politicians and commentators who talk about sanctions against Russia, repeating incantations that these sanctions work, or will work in a more distant time. It is not specified exactly how they will work. On the other hand, there are experts who argue that sanctions do not work, but such publications are far less frequent. It is clear, however, that sanctions do affect the Russian economy in a number of ways, and the best way to look at their effects is to stick to the numbers, such as economic statistics. So far, the most distinctive effects of the sanctions have been the enormously widened current account surplus and a very strong ruble – not only in real but also in nominal terms. A wider use of currencies other than USD and EUR, such as CNY, AED, HKD, for foreign trade was another interesting effect. After the inflation spike in March and April consumer price dynamics turned deflationary for almost three months.
Rosstat recently revised industrial statistics for 2021 and 1H22, implying that some of the conclusions based on the previously published data may need an update. It now looks as though the y-o-y contraction in industry in 2Q22 was deeper than was initially reported (2.5% instead of 1.7%). Rosstat also reported that seasonally adjusted industrial output increased in July by 1.2% m-o-m after being flat in June and May. The performance of industry as a whole and the mining sector by itself seem to have generally flattened in mid-2022, while manufacturing is still on a downward trend. As the sectoral structure radically changes from being affected by sanctions, one can hardly expect steady growth in the sector until major structural change has been accomplished.
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