OREANDA-NEWS. November 19, 2009. Rosstat figures have Russian industrial output in October down 11.2% YoY, with 10M09 figure reflecting a 13.3% YoY drop. According to Deputy Minister of Economic Development Andrei Kepach, seasonally adjusted, the drop in industrial output was 1% MoM, reported the press-centre of OTKRITIE Financial Corporation.

View: October’s fall in industrial output was driven by weak performances in the manufacturing sectors, which saw a 17.5% drop YoY, their steepest decline since June. Particular problem areas were machinery and construction materials, that is, in investment goods. While previous months revealed some signs of improvement, the October figures return a sense of uncertainty to the mix.

We believe that to a great extent these results are a function of Russian fiscal policy, as budget investment expenditures were the first to be cut (both in the current budget and in next year's budget). The chief concern is that without restoring investment, stimulating consumption will cause import to grow, especially on the back of a stronger ruble.