SERGEI TSUKHLO: “INDUSTRIAL GROWTH HAS DEMONSTRATED UNSWERVING OPTIMISM SINCE THE START OF 2021”

“For almost six months, industries have been prepared to drive up sustainable industrial growth. This intent is underpinned both by favorable demand outlooks and insufficient stocks of finished products. It is noteworthy that output projected changes at the enterprise level became positive as early as 2020: the industry was prepared as never before to demonstrate “that bouncing from the bottom of the crisis,” Sergei Tsukhlo, author of the study, believes.

At the same time, in May the estimates of stocks of finished products declined, thus suggesting a pickup in shortages thereof, which factor is sooner the evidence of enterprises’ uncertainty despite a high level of optimism in expectations, while sustainable growth is normally accompanied by moderate

manageable surplus of stocks. In addition, demand in companies’ products is growing slower and slower though dissatisfaction with sales (28%) is at the minimum since 2007.

However, slowdown of sales is compensated to the industry by current price rises and expectations of further appreciation thereof; it is not yet clear when the sector succeeds in establishing the equilibrium. As it is recognized both by the Rosstat and analysts, the pricing factor has become a principal one in favor of output growth. As per the data of the Gaidar Institute, in May the industry’s inflation expectations increased by another 8 points, surpassed the latest record of the 21st century (July 2008) and entered the pre-default plateau of October 1998 - October 2000. At that time, the industry’s price projections remained invariably in the range of 38-47 points in positive territory with the average weight of 44 points. The same result was received in May 2021, too.

“It seems the next record is in sight, that is, the post-default peak registered in September 1998 when the balance of price forecasts was equal to 53 points in positive territory. Let’s hope that things will not get as far as the records seen in 1993 and 1995,” Segrei Tsukhlo concludes.