The pace of Russian industrial growth in July was unchanged from that on average in the first half of 2014, according to Charles Movit, Senior Economist, IHS Economics.
Growth of physical output of the energy branches remains slow while sluggish domestic demand and weakening export demand have weighed on the manufacturing sector. The pacesetting branches of manufacturing in the first half of 2014 in terms of gross output (the latest data available at that level of disaggregation) were textiles, petroleum refining and coking, and, in particular, transport machinery (at 14.2% y/y).
In the case of insufficient domestic demand, this has been most apparent in the producer goods branches. Investment activity in Russia has faltered in the face of slow economic growth, an uncertain external economic environment, rising geopolitical tensions and rising interest rates. The Central Bank of Russia has raised its key interest rate 250 basis points since early March 2014 in order to stem capital flight and support the rouble. Moreover, recent purchasing managers’ surveys have indicated that export orders have tailed off as well. Clearly the weaker rouble did not do much to improve the revealed competitiveness of Russian manufacturing on international markets.”