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Bank Rossii Eases Further As Russia's Economy Contracts At A Record Rate

The ECB's Balance Sheet At A Glance.

Friday, February 15, 2008

Russia Industrial Output January 2008

Russian industrial output growth slowed in January to an annual 4.8 percent when compared with January 2007. The result was largely the result of a high "base effect" due the fact that an unusually warm winter in 2006/07 boosted manufacturing output in the same period last year. Growth eased back from a 6.5 percent annual rate in December, according to data released today by the Moscow-based Federal Statistics Service. Growth was running at an annual 8.4 percent rate in January last year. Month on month production fell 14.1 percent, but this is not surprising in view of the impact of weather conditions. In addition Jan. 9 was a public holiday.

What is perhaps much more significant than the month by month changes is the long run trend which shows industrial output growing much more slowly than consumer demand. This may well mean that Russia will eventually run a trade deficit, since oil output cannot be raised significantly, at least over the appropriate time horizon, since many observers are predicting that Russia could move into a trade deficit as early as 2010. Indeed, Andrei Klepach, the Economy Ministry's chief forecaster, recently said that he felt Russia's surplus may shrink to $13 billion by 2010 before disappearing completely a year later.

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