Russian Industry Sees ‘Unprecedented’ Drop in January (Update1)
By Alex Nicholson
Feb. 16 (Bloomberg) -- Russian industrial production slumped more than economists expected in January as demand eroded for cars, trucks and construction materials.
Output shrank 16 percent after falling 10.3 percent in December, the Moscow-based Federal Statistics Service said today. That was the biggest contraction since the service moved to a new methodology in 2003. The median estimate in a Bloomberg survey of 12 economists was for a 12 percent decline. In the month, production dropped 19.9 percent.
“We are seeing a very sharp contraction in a very short period of time, which is unprecedented,” Vladimir Osakovsky, an economist at UniCredit Bank, said by telephone.
East Europe’s economies are being battered by the global economic decline, which curbed demand for their exports while crimping credit and investment. Factories across Russia extended New Year holidays into January as the domestic market also shrank. The government expects the economy to shrink 0.2 percent this year, the first contraction since a default in 1998.
The currency lost 1.3 percent to 35.0799 per dollar by 2:03 p.m. in Moscow, after gaining 4.3 percent last week, the biggest weekly advance since December 1998. The Micex stock index slumped 2.6 percent to 713.51.
Manufacturing Fell
Manufacturing fell an annual 24.1 percent in January, compared with a 13.2 percent drop in December. Tire production plummeted 83.1 percent as car and truck output fell 79.7 percent and 76.4 percent, respectively. Output of cement fell 44.3 percent as builders struggled to find funds to complete projects.
AvtoVAZ, Russia’s biggest carmaker, idled its production line Dec. 29 for a month, while KamAZ, the nation’s biggest truck producer, resumed output on Feb. 12 after halting production in December.
Mining and quarrying contracted an annual 3.6 percent in January as iron ore output fell an annual 39.7 percent.
The contraction of industry contributed to joblessness surging by about half a million people in December, boosting the unemployment rate to 7.7 percent.
Rising unemployment is the “biggest problem” and the “biggest pain” for Russia as it goes through its worst economic crisis in a decade, President Dmitry Medvedev said in an interview shown on state television yesterday.
To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.
Last Updated: February 16, 2009 07:39 EST |
