Posted on 17 Nov 2011
Russian industrial-production growth probably decelerated last month to the slowest pace since it began expanding in October 2009, a sign the broader economy may be at risk of stalling.
Factories, mines and utilities increased output 3.5 percent from a year earlier in October after a 3.9 percent gain in September, according to the median estimate of 18 economists in a Bloomberg survey. The Federal Statistics Service in Moscow is due to publish the data today or tomorrow.
Sales are shrinking at companies including Evraz Plc, the steelmaker part owned by billionaire Roman Abramovich, as global demand falters and Europe’s debt turmoil shackles credit flows. Moderating growth in Russia may prod the central bank to ease borrowing costs after gross domestic product missed economist forecasts with a 4.8 percent increase in the third quarter, according to Renaissance Capital and VTB Capital.
“Companies will be reducing stockpiles in the fourth quarter, adapting to a weaker demand outlook and unfavorable conditions abroad,” Natalia Orlova, chief economist at Moscow- based Alfa Bank, said by phone yesterday. “That means an industry slowdown will continue, dragging economic growth in the last three months of the year to 3 percent.”
The benchmark Micex Index (INDEXCF) has lost 12 percent this year, led by OAO Raspadskaya (RASP), a coal producer, OAO Magnitogorsk Iron & Steel Works (MAGN) and OAO Mechel (MTLR), the country’s largest coal miner, all three of which plunged 57 percent.
Muted and Lackluster
Industrial output may slow this quarter after uncertainty on global markets hurt exporters in the previous three months, Deputy Economy Minister Andrei Klepach, who reiterated this week that gross domestic product will expand 4.1 percent in 2011, said on Oct. 26.
Russian manufacturing expanded in October for the first time since June even as the increase in new business was “muted” because of slow growth on export markets and “lackluster” domestic demand, HSBC Holding Plc said Nov. 1, citing data compiled by London-based Markit Economics.
Evraz yesterday reported $722 million in earnings before interest, tax, depreciation and amortization in the third quarter, compared with $889 million in the previous three months, as sales fell.
The central bank left borrowing costs unchanged last month after two increases this year, saying money-market interest rates are at an “adequate” level to balance risks from inflation and an economic slowdown. Policy makers may adjust that stance to spur growth, Renaissance Capital said yesterday in a report prepared with Moscow’s New Economic School.
“The bias with which the Russian central bank operates over the next couple of months will be an easing one,” the economists wrote. “We expect to see increasing signs of this more moderate pace of economic activity on the back of weaker external demand and the completion of the inventory restocking cycle.”
