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. 

industrial production

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.

industrial production

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.

The procurement coordination framework for investment projects in engineering was launched

Engineering industry largely determines the overall economic situation in Russia; it ensures the functioning of the leading sectors: fuel and energy, defense and agricultural sectors, transport and communications, construction and filling of the consumer market.

The meaning of engineering as the largest component of manufacturing industry is hard to overestimate. Thus, according to 2014 results, the contribution of manufacturing industries to total gross domestic product is more than 15%, that is inferior only the contribution of trade (over 18%) and finance (over 17%).

As the basic system industry, engineering is more exposed to the crisis. According to experts, the consequences of 1998 crisis in engineering haven’t completely overcome, moreover, they aggravated under the influence of 2009 global economic crisis and negative trends of 2014-2015.

Because of this, the priority task, which must be solved on a qualitatively new level, is the attraction of investment into the industry. The update of coordination framework is aimed at this problem. This update is defined by the Federal Law from June 13, 2015 of No. 249 Concerning the Introduction of Amendments to the Federal Law “Concerning Purchases of Goods, Work and Services by Certain Types of Legal Entities” and Article 112 of the Federal Law "On the contract system in the procurement of goods, works and services for state and municipal needs".

With the help of amendments, the Law No. 223-FZ is extended on the procurement of engineering products, which are held by state corporations and companies, commercial companies, the share of state participation in authorized capital of which exceeds 50%; and also on procurement by means of the funds for investment projects, the worth of which is more than 10 bln. RUB; it was previously established by the Government of the Russian Federation.

The adjustment and control function over implementation of investment projects is assigned on the coordinating body of the Government of the Russian Federation. The functions also include the matching of characteristics of engineering products for the implementation of investment projects and the possibility of procurement of such products abroad. The basis for decision making will be the procuring entities’ lists of future needs in engineering products for a period of not less than 5 years or for a period of project implementation.

Besides, the coordinating body is authorized to make decisions about the necessity of data placement about procurement of engineering products in the Unified information system (UIS). The customers will be able to make contracts for the supply of products, work and services only in accordance with the plan, placed in UIS, except the cases of accidents or emergencies.

The law provides the creation of special registry for investment projects and the order of its operation. Is also provides the criteria of inclusion of projects in the registry, such as providing a guarantee to the Russian Federation, full or partial financing from the Federal budget, National welfare Fund and "Bank for Development and Foreign Economic Affairs (Vnesheconombank)"

Amendments to the Federal Law from 05.04.2013 № 44-FZ extend the action of transitional provisions in relation to the procurement for state needs of the Republic of Crimea and Sevastopol till 31.12.2015.

The law № 249-FZ came into force on 13.05.2015 and the amendments to the Law № 223-FZ will be effective from 10.01.2016.

You can get acquainted with the activity of engineering complex enterprises with the help of search requests or selections in the Information and analytical system Globas-i®.