Sergei Tsykhlo: “Industrial output dynamics will remain quite uncertain”

By Rosstat’s estimates, in November 2021 industrial output increased by 7% year on year though analysts expected its substantial slowdown amid exhaustion of a positive base effect and subsiding annual dynamic. Most probably, the current estimate will be adjusted upwards as it has repeatedly been the case of late. In the light of this, in 2021 industrial output growth is likely to surpass largely the RF Ministry of Economic Development’s forecast of 4.2% because from January through November industrial output growth amounted to 5.2%, an increase of 2.4% relative to the relevant period of 2019.

According to the Gaidar Institute’s business surveys, they register respondents’ declining optimism for two years in succession. In December, they were dissatisfied again with demand which remained at the level of November.

“By the end of the year, the balance of demand estimates lost 20 points after attaining the historic maximum (throughout the entire business surveys period of 1992–2012) in August. However, satisfaction with demand still surpasses the estimates of the second “stagnant” decade of the 21st century,” Sergei Tsukhlo notes.

It is noteworthy that high prices in manufacturing and consumer price inflation will not let the RF Central Bank register confidently economic activity growth despite higher dynamics of nominal payments in November and early in February. It remains to be seen what growth rates the industry will demonstrate when the situation has stabilized and how soon this sustainable growth bumps into institutional barriers which are still there.