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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.

Wednesday, December 5, 2007

Industrial Output In Russia

The emergence of this negative contribution of net exports to GDP growth is important, and is largely explained by rapid acceleration of imports and Russia's weak non-energy export performance which have meant that the size of the trade surplus has been steadily declining. Booming domestic demand has been fuelling import growth, while the real appreciation of the exchange rate and rising labour costs far beyond the levels of productivity increases have been eroding competitiveness in most tradable sectors in manufacturing (outside resources and metals) in so doing raising the question of just how sustainable that Russian trade surplus actually will prove to be in the mid term.

Latest Rosstat estimates indicate that industrial growth, and in particularly, manufacturing growth, slowed in the third quarter of the year. Industrial production in August and September grew by only 3.0 and 3.8 respectively, as compared to 4.1 and 5.6 percent reported for the same months a year earlier. Similarly, preliminary statistics for August and September already show manufacturing growth of only 5.5 and 4.0 percent respectively, compared to 6.2 and 5.1 percent last year. Four out of thirteen manufacturing industries reported negative growth rates in August and five in September, compared to only two last year. Just four manufacturing industries reported higher growth rates in August and September 2007 than during corresponding months of last year. The same sort of notable slowdown was also reported for extraction industries.

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