Industrial Growth at the Level of 103.6% by the End of the Year is Highly Problematic

In the first two quarters of 2012, the dynamics of manufacturing growth points to the fact that growth at the level of 103.6% forecasted by the Ministry of Economic Development in the current year is getting hard to achieve.

For three quarters running, in manufacturing quite stable growth rates were observed as compared to the previous year. However, in August and September 2012 a drop in the manufacturing output as compared to the previous month was registered and such a situation determined monthly negative dynamics of manufacturing growth rates in general in the 3rd quarter.

As in the post-crisis period the dynamic recovery of engineering had a significant effect on the general indices of development of manufacturing; it is to be noted that in the current year a sudden slowdown of growth rates of all the business lines of the engineering complex has been observed. In September, the minimum value of the engineering output in the past period of 2012 was registered. In September 2012, as compared to September 2011 the index of manufacturing of machines and equipment amounted to 89.5% (in January-September, to 100.4%), the index of manufacturing of electric, electronic and optical equipment, to 100.3% (105.2%) and the index of manufacturing of transport means and equipment, to 100.0% (117.2%). The positive dynamics of manufacturing of transport means and equipment is still supported by the output of cars as it makes up so far for a drop in the output of trucks and some types of railway engineering products.

With a slowdown of growth rates of investment activities and demand in capital goods, there were still advanced growth rates of production of building materials, constructions and metallurgical products with a simultaneous growth in stocks of machines and equipment. Comparison of the dynamics of the main investment market indices shows a delay in a reaction by manufacturers to changes in the domestic demand, and such a situation may in future result in a substantial adjustment of output plans related to the building industry complex.

In September 2012, as compared to August 2012, in most industries there was a dramatic drop in the output of intermediate products: in the chemical complex (by different business lines) there was a drop of 5.7% to 8.0%, while in forest industry - 3.4% to7.3%. Both a slowdown of growth rates as compared to September 2011 and a drop in production on the previous month of the current year point to domestic limitations in development of specific industries -- availability of required production capacities and personnel -- and changes in the demand on the domestic and international markets.

In production of consumer goods, stable positive dynamics is still registered only in food industry, while in textile and sewing industry, as well as in production of leather and footwear a drop in production was registered as compared to the previous year. However, in analysis of the dynamics of production of food products it is important to take into account the effect of agricultural industry. A drop in the output of agricultural primary products results in a regular slowdown of output growth rates of food products during 2012. In September 2012, agricultural products amounted to 92.3% of the relevant index of 2011 (in January-September, to 97.7%), while the output of food products, to 103.6% (105.6%).

О.I. Izryadnova, Head of the Structural Policy Department