The industry of Russia: the state in early 2018

25 / 02 / 2018

The Institute of Natural Monopolies (INM) published a monitoring of the state of Russian industry in January 2018. At the beginning of this year, the indices of the industry are worse than last year, but at the same time more optimistic than at the beginning of 2016. The growth of business activity in low- and medium-tech industries can not yet compensate for the effects of the decline in the extraction of key raw materials – oil and gas.

As a result of January, the demand indices showed mixed dynamics: the INM production index decreased by 0.3% compared to January 2017, the demand for the INM demand grew by 1.4%. Compared to January 2017, the dynamics of both indicators is slowing down: last year, according to the results of January, the value of the INM-production index was + 3.4% (by January 2016), the INM-demand – + 3.9% (on the methodology for calculating indices INM – in the background information). Demand in the extractive industries continued the decline, which began in the second half of 2017: in January, the indicator fell by 1.0% compared to January 2017. The negative value was primarily due to the decline in oil and gas production, the reasons for which were noted earlier.

At the same time, coal production continues to grow: in January 2018, its volume increased by 1.8% (by January 2017) to 34.3 million tonnes, while last year also recorded a significant increase – + 4.7% to January 2016. The main factor stimulating production is export, whose growth is mainly due to the high level of demand from China. Demand in low-tech industries continues to grow (+ 8.0% as of January 2017) against record growth in the previous year (+ 6.1% by 2016, the highest value for the last 5 years). This growth in demand is mainly due to the positive dynamics of the light and food industries.

Also, demand continues to grow in medium-technology industries: in January, the increase was 2.6% by January 2017. The main driver in this segment continues to be the growth in demand for metals from machine-building enterprises in the production of cars and railway rolling stock. At the same time, serious risks for the metallurgical industry bear the possible expansion of anti-dumping duties on metal products, including non-ferrous metals, from the European Union and the United States. At the same time, the demand for high-tech products continues to decline – -4.7% by January 2017. The reduction in demand in this segment occurs despite continued growth in the automotive industry.

Moreover, the decline of the indicator accelerated compared to the previous year: according to the results of January 2017, the decline was 2.2% compared to January 2016. “The beginning of 2018 again illustrates the problem of dependence of the Russian economy on the fuel and energy sector,” said Evgeniy Rudakov – the deputy head of the INM Department of Energy. “Growth is observed almost throughout the list of manufacturing industries, in addition – and growing coal production, but the decline in oil and gas production by only 1.5% and 1.3% respectively, predetermines the decline in the general industrial index of production.”

Full version of monitoring the state of the industry based on the INM indices available