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Wednesday, May 21, 2008

Oil Industry to Recover from Stagnation

May 21, 2008 - Kommersant - Official statistics released by the federal authority Rosstat for January through April proved more optimistic than the expectations of economic analysts. The industrial output grew by 6.9 percent in the first four months and surged 9.2 percent in April, mostly on engineering and construction industries. Lower decline in production of oil is also the good news of past month. The statistics on industrial output in April exceeded expectations of analysts, who had forecasted the growth of slightly above 6 percent. Yesterday, however, Rosstat reported that the industry stepped up 9.2 percent on year in April (vs. 6.5 percent in March, 7.5 percent in February and 4.5 percent in January), having neared the 10.3-percent record of July 2007. The April performance enabled the industry to catch up with last year’s growth, which was the same 6.9 percent in the first four months of 2007. The impact of processing industries was again the greatest. There, the growth averaged 14.5 percent on year in April, while the car output increased 28.8 percent, production of hydraulic pipes went up 77.6 percent and the tractor output surged 2.1 fold. What’s more, the production of oil manifested the first signs of recovering from stagnation exactly in April. The average daily production is still going down, but the pace is much slower than in the previous months. It dropped 0.4 percent in January, lost 1.4 percent in February, sank 1.6 percent in March and lowered just 0.4 percent in April. In the government, they also stake on the oil recovery. Vice Premier Igor Sechin told Interfax last week that the decline in oil output would give way to the increase by the end of 2008. Sechin supervises the country’s fuel and energy complex and the use of natural resources. So, today’s concern of economists is probably to revise the annual outlooks for industry. “By all appearances, the growth could be above 6 percent,” said Vladimir Salnikov from the Center of Macroeconomic Analysis and Short-Term Forecasting. And it is more than the official forecast of 5.7 percent.

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