Rosstat reported a new growth in industrial production in January 2024 after stagnation
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Rosstat reported a new growth in industrial production in January 2024 after stagnation in the second half of 2023 – taking into account seasonality in January, output, according to Rosstat, increased by 0.7% compared to December (and by 7.6% in annual terms). However, it is premature to talk about a resumption of growth in the sector, analysts at the Center for Macroeconomic Analysis and Short-Term Forecasting (CMACF) are convinced. Firstly, it is correct to talk about growth when output increases for at least two (or better yet three) months in a row. Secondly, Rosstat’s January assessment is not confirmed by the center’s own estimates (they use a narrower basket of goods from manufacturers with the most reliable data, see chart). Estimates from the National Research University Higher School of Economics, as well as data from Rosstat, record a jump in production in January, but from a lower level and after an almost equally long stagnation. It is also premature to talk about a downward trend in output, but the absence of any “positive” in recent months is obvious, given that the cold weather has increased the contribution of energy to the growth of industrial production, the Center notes.
Raiffeisenbank analysts agree with this. Their base scenario assumes stagnation of industrial production in the Russian Federation in 2024 (on average month to month, taking into account seasonality, with an increase of 2–2.5% per year) – production dynamics are cooled by foreign trade restrictions. The expansion of output in processing with high capacity utilization and a shortage of workers may be associated with new investments. “Even in a scenario with active investments from the private sector (with government support), the result of the implementation of new projects may be noticeable with a lag,” analysts explain.
The Gaidar Institute names four risks for the sector in 2024. This is the difficulty of drilling new wells due to dependence on imports (software for geological exploration, marine seismic exploration, GIS technologies and general-purpose infrastructure equipment for working in remote regions), a shortage of labor, forcing the reduction of requirements for its competencies, which in the short term reduces productivity and labor quality, high inflation as a consequence of competition for employees in industrial sectors and, finally, secondary sanctions – increased control over their compliance can limit the use of the dollar and euro in external payments and increase trade costs.
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