(Corrects December GDP figure in sixth paragraph.)
Russian industrial output shrank in February, contracting by the most in more than three years as mining and utilities production weakened.
Output dropped 2.1 percent from a year earlier, when February had 29 days, after a 0.8 percent contraction in January, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 19 economists in a Bloomberg survey was a for a 1 percent contraction.
The economy of the world’s largest energy exporter expanded last year at the lowest pace since 2009 as Europe’s debt crisis and a slowdown in China sapped demand for its commodities. Bank Rossii, faced with the fastest inflation in 18 months, left borrowing costs unchanged for a sixth month last week, saying market rates were acceptable.
“We would expect industry to be close to stagnation even without the calendar factor,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Merrill Lynch, said by e-mail before the release. “Export and investment demand is weak, which constrains any existing potential for growth.”
The Micex Index of 50 stocks fell 2.4 percent to 1,458.70 as of 3:16 p.m. in Moscow, heading for the weakest close since Dec. 11. The ruble weakened 0.7 percent against the dollar to 30.8710 amid speculation over risks from a plan to force losses on Cyprus bank depositors.
Mining contracted 2.2 percent after a 1.2 percent drop in January, the statistics service said. Output at utilities fell 10 percent after a 1.8 percent gain the previous month, while manufacturing fell 0.1 percent, improving from a 0.3 percent decline. Gross domestic product increased 1.6 percent from a year earlier in January, compared with 2.4 percent in December.
“If overall economic growth starts approaching 2 percent a year, this will likely tilt the central bank toward earlier policy easing,” Vladimir Pantyushin, chief economist at Barclays Plc’s investment-banking unit in Moscow, said by phone before the release. “With lending growth in double digits, it’s hard to argue that monetary policy serves as a limiting factor.”
President Vladimir Putin’s economic aide Elvira Nabiullina, a former economy minister, is set to take charge of the central bank in June, replacing Chairman Sergey Ignatiev, who’s frustrated calls by Putin’s government to ease borrowing costs. Putin has made economic expansion a priority for his third term, with Prime Minister Dmitry Medvedev setting a long-term growth target of 5 percent a year.
“The weaker reading could be a factor of concern” for the central bank, though it doesn’t yet threaten full-year economic growth forecasts, Dmitry Polevoy, chief economist for Russia and Kazakhstan at ING Groep NV in Moscow, said by e-mail before the release.
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