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Nabiullina did not help. Russian industry continued to fall

Набиуллина не помогла. Российская промышленность продолжила падать

Russian industry falls and decreased for the fourth month in a row. To raise it from the bottom wasn’t “unprecedented measures” to support the authorities nor the output of the economy from quarantine in may, a reduction of the key rate from 5.5% to 4.25% in two months. The purchasing managers ‘ index (PMI), according to calculations IHS Markit in July was below the critical 50 points and fell from 49.4 to 48.4 points. In the second quarter, according to Rosstat, industrial output fell 8.5 percent.

Available credits will not save the industry

  • Representatives of the real sector tend to see the cause of their problems in the tight monetary policy of the Central Bank. Accordingly, the head of the Central Bank Elvira Nabiullina is a symbol of financial difficulties, including the industrial sector. At his last press conference, Nabiullina came out with a brooch in the shape of the letter “V” that could be construed as “vendetta”. Lowering the key rate to a historic 4,25%, Nabiullina has thrown the ball on the field of Industrialists – they now need to ensure economic growth.
  • In addition to the fact that manufacturers ideally want zero interest rates and criticized as billionaire Oleg Deripaska, the Central Bank for the final interest rates on loans (they reach 17% at the expense of profits of banks and the need to create reserves), there are more problems to solve that Russian industry is not able to.
    • This is indicative in this respect: non-working days was over two months ago, but the production sector, according to Markit economist at IHS Siana Jones, “took a step back”. Production volumes began to rise, but there was something always say supporters of the policy of the Central Bank: ready to sell products no one. The number of orders is reduced both inside the country and abroad. Customers fluctuate due to uncertainty and not in a hurry to buy finished products.
    • Difficulties with demand is complicated by the devaluation of the ruble prices of imported raw materials rebounded sharply, but to shift the costs to consumers from manufacturers is not obtained, because the demand is already falling. Therefore, in the whole industrial sector are dismissed “at own will” – entrepreneurs to save on labor. Because of this, the idea of the authorities to send the unemployed to public works for the minimum wage is increasingly gaining relevance.
    • Managers of industrial enterprises and the owners, as shown by the survey of the Center for business research, complain of weak demand (46%) and insufficient for the development of production volumes (29%). In June, according to the HSE, capacity utilization in the manufacturing sector, 58.4%, which is worse than the crisis 2014-2016.
    • In General, the dynamics improved a bit by months: in April, the industry showed a drop of 10%, in June it was 6.4%. However, at the end of the year it will be reduced by a corresponding amount of 6.4%. The output of the pre-crisis production volumes is possible only in the fourth quarter of 2021. And the interest rate of the Central Bank can not speed up this recovery.

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