The situation with industrial production is going to improve

Industrial production in Russia in August 2015 is marked with 4,3% decrease (picture 1). Declining trend is observed during four months successively (since May till August). So, for example in July the fall of industrial production was 4,7%, in June – 4,8%, in May – 5,5%. Summarizing the results of January-August 2015, industrial production on the average was diminished up to 3,1% in comparison with the same period in 2014. 

Picture 1. Index of industrial production, % to the same period of the previous year 

Declining linear trend is foremost determined by negative trends in Russian economics that increased under the influence of external factors. 

Considerable of them are:

• The influence of sanctions imposed on Russia,
• declining oil prices, significant weakening of the rouble,
• disinvestment,
• cash outflow,
• decrease in  lending/financing,
• reduction of consumer demand and others. 

In August 2015 gain in industrial production was 0,2 percentage point in comparison with July 2015 (picture 2). Such insignificant increase can be explained with the fact that in August some productions, e.g.: automobile, machine building, steel-casting industries, have sent employees in company holidays. The period of May-August 2015 is marked with increase as compared to the previous month and in relation to the first quarter, when industrial production was in trouble after the events of December 2014.

Picture 2. Index of industrial production, % to the previous month of the current year

The index of industrial production analysis for 9 months of 2015 and its trend let us make a careful conclusion that the situation with industrial production is going to improve gradually. However, such tendency is not stable yet and is undergone to unexpected factors. Such influence was observed in August 2015, when the international oil price decreased up to 42 USD per barrel, rouble almost reached the mark in 71 rouble per dollar. As a result, the Russian Government was forced to reconsider estimated figures of 2015-2016 and temporary reject three-year development planning of economics.

According to the Ministry of Economic Development of the Russian Federation`s forecast, index of industrial production in 2015 to conservative version of development will decrease on 3,1%, to baseline version – 3%. Summarizing the results of 2016 decrease on 0,4% to conservative version and increase on 1,1% to base version is expected. Nevertheless, the Ministry of Economic Development of the Russian Federation believes that degradation of the situation with production in relation to the figures of last months is unlikely. In this case there is assurance that production renewal will start in the third or the fourth quarters of 2015, or in the first quarter of 2016.