SERGEY TSUKHLO: JULY'S INDUSTRIAL POLLS SHOW A SLOWDOWN IN THE RECOVERY FROM THE CURRENT CRISIS

The July industrial surveys conducted by Gaidar Institute on a wide range of indicators demonstrate a slowdown in the pace of recovery from the current crisis. "Pressure of the ongoing sanctions followed by Russia’s explicit and implicit response resulted in growing intensity of the drop in demand, lack of positivity in sales forecasts, rejection of output growth and rising pessimism in production plans," Sergey Tsukhlo said in the survey.

According to his information, "the uncertainty of the current situation and its prospects" took the first place in the ranking constraints to industrial growth. "Growth in the normal sufficiency of Russian components and raw materials for enterprises is combined with a reduction in the normal provision of imported ones," the expert continued. Industry stopped hiring personnel and has no plans to resume hiring in the coming months, as well as any layoffs. Enterprise investment plans, which failed again in June after two months of recovery, were not able to start a new growth cycle in July and remain in a zone of high pessimism," said the author of the study.

However, even in this scenario, it is important to clarify that the situation presents a mixed picture. The study specifies that in the past month Russian industries have been coping differently with import substitution.

"The food industry has been the most successful with the deficit of imported raw materials and components falling from 79% to 48%. This result is due both to efforts of the enterprises and to the active support of the state. The light industry was less successful and challenges related to import substitution do not currently present a high priority for both the enterprises and the Russian authorities," added Sergey Tsukhlo.

However, according to the author, "there has been little or no success in import substitution of components in the Russian machine-building industry". "The Russian chemical industry reported a slight increase in insufficient supply of imported raw materials. Construction enterprises faced more issues over the past month amid seasonal growth in demand and failure to fully satisfy it due to disruptions in the supply of imported raw materials," he continued. The largest growth in the inadequate supply of imports is registered, according to the author, "in the timber, woodworking and pulp and paper industry, which faces no basic raw materials issues, but cannot do without imported chemicals, varnishes, paints and fittings".