Dynamics of the industrial production in Russia for 7 months of 2020

In January-July 2020, industrial production in Russia reduced by 4,2% comparing to the same period of the previous year. The maximum reduction to 9,6% was recorded in May. Since June there is an emerging trend to improve the situation.

Picture 1. Dynamics of the industrial production, %. Source: Rosstat, calculations of Credinform

The negative annual dynamics in the manufacturing industry was recorded also in 2009, the reduction was 10,7%.

Manufacturing recovers, and mining industry continues to slow down

In March 2020, manufacturing had an increase by 2,6% comparing to March 2019. After the restrictions imposed in April, there was recorded a slow down by 10% in comparison with April 2019. In July 2020, the reduction became slower and was 3,3% comparing to July 2019.

Picture 2. Dynamics of the industrial production in manufacturing and mining industries for March-July 2020, % to the same period of 2019. Source: Rosstat, calculations of CredinformIn March 2020, mining was slightly decreased by 1,7%. However, in April-June the decline increased and reached 15,1% in July. For a long time, oil and gas industry will be affected by negative demand for energy resources, as well as obligations of Russia as part of OPEC+ new deal.

Not oil alone

In the structure of the industry, the share of sectors producing products with high added value is increasing. In January-July 2020, manufacturing industries produced 66,7% of the total volume of goods, works and services in monetary terms; 22,1% - mining industries, 9,4% – electrical energy industry, 1,8% – water supply, wastewater disposal, waste collection and disposal. This dynamics of increasing the share of manufacturing industries has been traced for several years.

Picture 3. The volume of shipped produced goods and works in January-July 2020. Source: Rosstat, calculations of Credinform

The structure of manufacturing industry

Picture 4. The first 3 positions in terms of total output in January-July 2020, %. Source: Rosstat, calculations of Credinform

Manufacturing: affected sectors and growth leaders

Automotive production is the worst affected sector of the manufacturing industry: in January-July 2020, the automotive industry decreased by 24,6% compared to the same period in 2019.

Enterprises producing medicines and medical devices benefited significantly: for 7 months of 2020, they increased supplies by 16,3%.

Picture 5. Dynamics of production in January-July 2020 comparing to January-July 2019, %. Source: Rosstat, calculations of Credinform

Crisis in industrial production of world’s major economies

The current situation has affected the world's industrial centers in different ways. The maximum decline in production, comparing to the same period in 2019, was recorded in April 2020: 42,5% in Italy, 34,2% in France, and 25,3% in Germany. In May 2020, there was the peak of the industrial crisis in India with a slow down by 33,9%, Brazil – 27,2%, Japan – 26,3%, the USA – 15,3%, and South Korea – 9,6 %.

China experienced the consequences of the pandemic earlier than other countries: the maximum decline by 13,5% was recorded in February 2020.

Picture 6. Dynamics of the industrial production in the world’s major economies, % to the same period in 2019. Source: Rosstat, calculations of Credinform
Changes in legislation

Starting from September 1st, 2020 the Federal Tax Service of the Russian Federation gains a right to close down sole entrepreneurs by force. This provision is recorded by the amendments to the law №129-FL «On state registration of legal entities and sole entrepreneurs», adopted in November 2019.

Earlier the removal of sole entrepreneurs from the Unified State Register of Sole Entrepreneurs (EGRIP) without their consent was possible only under the court decision or in cases of the right reversion or end of residence period in Russia of a foreign resident – entrepreneur.

Now the authorities of the Federal Tax Service of the Russian Federation might declare sole entrepreneurs inactive and remove them from the register, if the following conditions are at the same time observed on the date of the arrival at a decision:

  • when 15 months passed after the patent expiration date or failure to provide accounts to the Federal Tax Service within last 15 months;
  • active arrears and tax, fee and due liabilities.

According to the data of the Federal Tax Service of the Russian Federation, as of August 1st, 2020, 4 021 658 active sole entrepreneurs and farms are registered. In the previous year this number amounted to 4 037 199. During 2020, 862 sole entrepreneurs and farms were liquidated under court decision.

Subscribers of the Information and Analytical system Globas can get all the available information (including historical data) on sole entrepreneurs and farms.