OREANDA-NEWS. August 18, 2010. Rosstat released figures for July industrial output, which slowed to 5.9% YoY. This represents a 0.1% MoM seasonally adjusted decline, coming after a 0.4% seasonally adjusted drop in June, reported the press-centre of OTKRITIE Financial Corporation.

View: Industrial output in July came below our forecast (6.8%) and the Bloomberg consensus (8.2%) estimates. Most of the decline was seen in the manufacturing industries. If not for the strong performance of regulated goods production – driven by increased demand for electricity in the hot weather - the overall industrial figures would have been worse. We believe the slowdown of industrial recovery cannot be fully attributed to weather conditions, thus August results could be even lower.

We note that leading indicators such as cargo turnover have been showing signs of a slowdown for several months now. We are also concerned with the acceleration of the growth in imports in the second quarter (to 33% YoY in 2Q10) and with signs of further imports growth in July. This is an indication that local producers are losing competitiveness and may not fully benefit from some improvement in demand. We reiterate our view of a very sluggish recovery in 2010 and reaffirm our forecast of GDP growth at 3.1% for FY10.