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    Where Industry Grows, the Economy Will Follow: Russian Industrial Output Up 2.3%

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    The April figures for Russia's industrial output are up 2.3% year-on-year, new statistics released by Russia's Federal Statistics Service have confirmed.

    Economic experts see the jump in industrial output as a positive sign, with the April numbers expanding on a 0.8% growth rate for March, and reversing a negative trend at the start of the year. After growing 2.3% year-on-year in January, output actually fell by 2.7% in February, owing partly to the loss of two calendar work days compared to the same period in February 2016.

    Overall, between January-April 2017, industrial production grew by a modest 0.7%. Still, the figures were above economists' pessimistic estimates, and are seen as a possible indicator of positive growth rates in the rest of the economy.

    Analyzing the figures, Russian business news portal Expert.ru indicated that figures on growth in infrastructure for industry were a particularly good indication, with growth for industries providing for electricity, gas and steam power up 2.4%, and those engaged in water supply, sewage and waste management up 3.8%. 

    Expert.ru admitted that one major problem is the economy's continued dependence on the extraction and sale of raw materials, and its subsequent dependent on the global prices of oil and gas. On that front, Alor Broker analyst Kirill Yakovenko told Expert.ru that there is now the strange phenomenon where Moscow and other major oil-producing states have agreed to cut back production, while US production and exports continue to grow. Russia is betting on forging alliances with the oil-exporting countries and seeing stable growth in prices, but the latter remain in no hurry to jump upward.

    Yakovenko suggested that for serious GDP growth to take place, regardless of global market conditions, the Russian Central Bank will need to reduce the cost of borrowing for businesses. 

    Russia's GDP grew an anemic 0.3% in 2016, stabilizing after a contraction of 3.8% the year before. For 2017, the Central Bank and the Ministry of Economic Development expect growth to be between 1.5-2%.

    One strong driver of positive economic growth in 2016 was the military industry and sectors associated with it. In 2016, the electronics industry saw impressive growth of 32%, while production of specialized chemicals grew by 22.5%. Shipbuilding was up by over 16%, the space industry by 7.5%, and the aircraft industry by 6%. 

    Healthy growth has also been recorded in the pharmaceuticals industry and in agriculture, as producers strive to substitute Western imports amid the sanctions and countersanctions war between Western countries and Russia over the Ukraine crisis.

    Russia's agricultural imports have declined dramatically in the last three years, while the sector has invested heavily into new infrastructure and expanded into sectors where Russian producers were traditionally thought to be uncompetitive.

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    Tags:
    industrial output, industrial growth, statistics, Rosstat, Russia
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