Current decline in output stems from a decline in demand largely

10 july 2015 | PROVED

Industrial output in Russia continues to fall. Despite economic forecasts projecting an improvement in the economy there are very few real signs that the situation in the manufacturing sector is going to pick up any time soon.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

The PROVED internet portal quotes the Head of the Department for Strategic Studies in Energy of the Analytical Center Alexander Kurdin who said that the slump in industrial output we are seeing today stems for the most part from a slump in demand.

“The survey the Federal Statistics Service conducted in June to find out the level of business activity in the country found that the most important factor putting the brakes on business activity in the processing sector is lack of demand in the domestic market, while competition from imports or lack of demand outside of Russia were mentioned far less frequently,” the expert reported.

The Internet portal has it that consumer demand really is in decline now. A study of household income and spending conducted by the Higher School of Economics found that in the first quarter the share of population with income below the living wage went up almost 2%, reaching about 23 million people (15.9% of the total). Experts contend that people are trying to spend less not just on durable goods but on day-to-day items.

It is for this reason that companies manufacturing goods for the domestic market and goods that have not been affected by the sanctions and counter-sanctions are at highest risk today. “We are talking mechanical engineering here, primarily the automotive industry, construction equipment and materials manufacturing, furniture manufactures, clothes and footwear manufactures as those are the sectors where we are seeing output contracting the most today,” Mr. Kurdin noted.