Industrial production growth halves, analysts warn


MOSCOW — Russia’s state statistics service presented the government an unpleasant surprise. Its reports show that the country’s industrial production growth rates halved from January through August 2005 compared with last year’s figures.

At first glance, industrial production seemed to be on the rise, growing 3.7 percent in the first eight months of this year compared with 12 months before, the statistics service reported. But growth was 7.6 percent from January to August 2004. In other words, industrial production growth dropped 50 percent this year.

In their report, the statistics service analysts speak of growing industrial production, but economists warn that growth is in fact falling. Leading financial analysts say their forecasts are becoming a reality. According to their figures, Russia’s oil production and the competitiveness of Russian products have fallen, while the number of Russians living below the poverty line has multiplied.

The industrial production index reflects performance by the mineral mining industry and the production and distribution of electricity gas and water.

Shrinking industrial growth is not in line with the government’s economic direction which aims to double GDP. Economists point to technical and global influences. Among the technical reasons they cite government miscalculation of Russia’s oil export capacity, resulting in oil exports rising only 2 to 3 percent this year against 12 to 14 percent last year, and artificial strengthening of the ruble which reduced the competitiveness of Russian products by 20 percent.

But the main reason behind the growth decline is government pressure on business, independent observers claim.

In terms of GDP growth, Russia outstripped all industrially developed countries in the first quarter of this year, the state statistics service reported on August 31. The country also led in industrial production growth in the first half of this year compared with 4 percent growth from the previous year.

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