Russian industrial output growth slowed to 2.7% year on year in August and 4.5% y/y in 8M24 overall, according to the latest data by RosStat. The seasonally adjusted growth was 0.8% m/m (after a similar decline seen in July).  (chart)

As followed by bne IntelliNews, industrial output growth peaked in May and then slowed down in June, as the overheated Russian economy is generally expected to cool off. This month the Ministry of Economic Development reportedly downgraded the outlook on industrial output growth, seeing it halving from 4% projected for 2024 to 2% in 2025, with the manufacturing growth dropping from 7% to 2.9%

The growth in August was almost entirely driven by manufacturing (4.7% y/y and 8.1% y/y in 8M24 overall), which “continued to play a decisive role in the dynamics of the whole industry for the past more than a year and a half,” Renaissance Capital analysts commented.

However, despite being part of a larger cooling trend, the industrial production data “does not yet point to a meaningful slowdown in economic activity, which would allow the Central Bank of Russia to comfortably raise the key interest rate,” RenCap analysts believe.

Even should the surveys conducted by the CBR and other indicators point to a slight cooling of business sentiment.

“We believe that these are the first signs of the beginning of the transmission of the latest monetary tightening into the economy. This allows us to expect that the key interest rate peak will be reached in the coming months (our forecast: 20% in October), but the time of its achievement and the specific level will primarily depend on the current inflation dynamics,” RenCap analysts argue.