Moscow News
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November 9, 2009
The only way is up
By Ed Bentley
Vladimir Osakovsky
Economist
UniCredit
There should be a substantive recovery taking place over the next few months but it really depends on key companies, Avtovaz in particular. Given that the government is pushing ahead to save the firm we don't expect any problems in that respect as the worst hit sectors seem to have really hit bottom for example steel production and construction materials.
Apart from that, there are some signs of recovery in export demand in Europe and especially in China which should support the recovery of other industries. Later next year, we might also expect a recovery in domestic consumption but we are unlikely to reach 2008's levels in 2010. However, with the strong low base effect we expect either substantial easing in the scale of the decline or even some year-on-year growth.
Yaroslav Lissovolik
Economist
Deutsche Bank
My sense is that industrial production should certainly pick up on the back of higher fiscal spending, which is likely to be significantly larger in November and December. We believe this will be conducive to an increase in real sector activity. Things should continue to improve in the first half of next year because the low base effect will kick in and it will provide for better year-on-year figures in industrial production. Starting from the second quarter of next year there should also be a recovery in construction, which will also be productive for some sectors, such as metals and mining. The trajectory of the recovery is likely to become steeper in the second quarter of next year but it won't be similar to the quick recovery we saw in 1998.
Vladimir Bragin
Strategist
Trust Bank
Quantitative data from recent months indicates that the fall in industrial production is slowing down, so there is hope we'll see some more optimistic figures in the coming months. We are now a year after the collapse of GDP and industrial production, which means that if we see good figures for November it will mean that the effect of a low base has started working. If the data is good it will be in comparison to low numbers the year before and therefore it'll be difficult to rely completely on indicators. But, we should look at unemployment, nominal wages and railway transportation to see if there is a recovery.
