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Why Russia’s Industrial Production Fell in September

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Nov. 20 2020, Updated 4:47 p.m. ET

September’s industrial production fell to 3.7% YoY

According to the Federal State Statistics Service, Russia’s industrial production index (IIP) fell to 3.7% in September, compared to a fall of 4.3% in August 2015, year-over-year, or YoY. On a monthly basis, industrial Production in Russia rose 3.4% in September 2015. The VanEck Vectors Russia ETF (RSX) and the Direxion Daily Russia Bull 3X ETF (RUSL) gained 3.3% and 9.4%, respectively, as of October 15. The Russia-focused ETFs fell by 17.9% and 68.4%, respectively, over the past year.

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Mining rose 0.8% in September

Industrial production is supposed to be an important economic indicator as it gauges current business conditions. Though the fall in September’s industrial production data was one of the steepest since March 2015, industrial production is still at a negative level and reflects that more might need to be done to regain confidence in the business environment.

In September, manufacturing production fell by -5.4% as compared to 6.3% in August 2015. Also, electricity, gas, and water fell by 2.6%, whereas mining rose by 0.8%. The mining stock Mechel OAO (MTL) rose by 14.5% while Norilsk Nickel (NILSY) fell by 8.9% over the past year as of October 15. Energy producers Rosneft (OJSCY), Gazprom (OGZPY), LUKOIL (LUKOY), and Surgutneftegas (SGTZY) fell by 38.7%, 29.9%, 22.4%, and 13.4%, respectively, over the same period.

Russia is one of the largest producers and exporters of oil. If crude prices stabilize in the international market then Russia may show further industrial revival. Along with a rate cut, Russia’s policy makers could take other policy measures to help the economy grow and not fall into recession.

You may also be interested to read What Led to Negative Industrial Production in the Eurozone?

To remain updated on the economic front, please refer to our Global ETF Analysis page.

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