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March industrial production and statistics report

March IP data is due out today or tomorrow, according to Rosstat’s official schedule. The monthly bunch of economic statistics for last month, which includes data on growth in real retail sales, fixed capital investment, real and nominal wages, and the unemployment rate, is set to be published by Thursday. Also, Rosstat is to release the weekly CPI data for 9-15 April on Wednesday.

The core indicator to watch this week is the unemployment rate, as a tight labour market seems to be the last hurdle in the way of more active monetary policy easing, according to CBR heads’ (current and next) comments. Another obstacle had been limiting the scope of easing – high headline CPI. However March’s slowdown in headline CPI eased this constraint, leaving the unemployment rate (SA has been at record lows recently) as the only limitation. We think SA unemployment is set to grow due to a subdued economy.

Overall, March data is likely to show some technical recovery from February’s depths. However, the underlying economic picture remains bleak and has so far not given any reasons for a recovery in the near term.

On the production front, we expect IP growth to rebound slightly, remaining in the negative area. Meanwhile, some rebound in the mining and electricity sectors on the back of the colder weather has likely stopped IP from deteriorating, despite the unfavourable calendar factor.

As for local demand, visible declines in both car imports and car sales last month guide that the overall trend for weak consumer data will remain in place. Investment growth is gravitating to near zero. In March, investments seemed to decline YoY, partly owning to the high base effect.

Also this week is the release of weekly CPI, which is likely to mark a further pick-up in vegetable price growth, which kicked in earlier this year than it did in 2012. However, as growth in fruit and vegetable prices is not likely to be that fast (assuming a normal harvest), we expect it to drag down CPI from May. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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