The Russian industry up in 2Q21 and 1H21 by 10.1% and 4.4% y-o-y

RUSSIA ECONOMICS - In Brief 23 Jul 2021 by Alexander Kudrin

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Rosstat reported that industrial performance was strong in June as it increased by 10.5% y-o-y. The mining sector was up by 13.8%, and manufacturing grew by 7.7% (both figures are y-o-y also). There are significant base effects and y-o-y growth in the mining will remain strong until year-end (either a double-digit or high single-digit), while in the manufacturing growth y-o-y will gradually moderate. In 2Q21 industry grew y-o-y by 10.4%, and in 1H21 the figure was 4.4% y-o-y. Growth numbers for the same periods in the mining sector were 7.8% and 0.0%, while manufacturing grew by 11.4% and 6.4% y-o-y.Rosstat reported that the seasonally adjusted industrial growth was negative in June (down by 0.4%), but this figure will be revised up next month as it regularly happened previously. Every month Rosstat revises up statistics that were reported a month ago.Industrial growth was broad-based in 1H21, and the same trends will continue in 2H21. Numbers reported recently do not challenge the GKEM Analytica growth forecast. The industry may expand from 5.5% to 6.0% this year, and the total number will be strongly influenced by the mining (oil and gas segments in particular). The industry remains an important part of the Russian economy as it represents 24.9% of GDP and 27.6% of the gross value added (i.e., GDP minus net taxes on products). As the industry is an important taxpayer and the main source of export revenues, GKEM Analytica will publish a more detailed report on the Russian industry next week.Evgeny GavrilenkovAlexander Kudrin