Russia Industry Output Drops 6.6% in April

Russia’s industrial output shrank 6.6% in April, the first full month of a lockdown due to COVID-19, driven by a drop in the manufacturing sector, data showed on Thursday.

April’s slump in output was not as severe as the 10% decrease analysts polled by Reuters had expected.

Russia’s economic indicators are in focus as its commodity-dependent economy took a double hit in March and April, both from the coronavirus pandemic, which has paralyzed much business activity and from a slump in prices for oil, its chief export.

Before a full-scale lockdown was imposed, industrial output grew by 0.3% year-on-year in March, while the economy expanded by 1.6% in the first quarter, before sliding into a projected contraction in the second quarter.

All the key components of the headline industrial output index contracted in April, the Federal Statistics Service said, providing no explanation why it delayed the data release by five hours from its usual reporting time.

Manufacturing output fell 10% compared with a year ago, while the extraction of raw materials declined by 3.2% and distribution of water and utilities fell by 11.4%.

In month-on-month terms, Russia’s industrial output dived 9.2% in April after growing by 6.4% in March.

Expectations that the Russian economy will contract by up to 6% this year and a spike in inflation, which proved to be only short-lived, prompted the central bank to pledge cuts to its key interest rate, sparking a rally in Russian government bonds to record highs.

The central bank said it will consider a 100 basis points cut in June, which would bring its key rate to 4.5%.

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