Spring revival of Tatarstan economy
The economic results of April 2016 indicate the continuation of positive trends in the economy of the Republic
While the economic 'viziers' of Putin are wondering how to induce the Russian economy on a path of long-term growth, in Tatarstan with the growth of the economy everything is all right. Growth is seen by most indices, both financial and natural. But the total Russian results in April 2016 gave reason for many positive comments. The President of Russia Vladimir Putin publicly stated that the crisis is over, and the Minister of Economic Development of Russia Aleksey Ulyukayev (again!) with his traditional 'we have felt the bottom and are pushing off'. The economic columnist of Realnoe Vremya newspaper Albert Bikbov agrees with them only in the short-term assessment of the situation and adheres to the saying 'never count your chickens until they are hatched'.
We are not afraid of oil shock
In four months of 2016 on the same period of last year, the industrial production index of the Republic of Tatarstan grew by 2.3%. It is despite the fact that in Russia the index of industrial production in January-April 2016 fell by 0.1%.
The index of industrial production of RT
As you can see, the industrial production of the Republic holds rather a high positive level for the third month. Although here, according to the economists, is 'a low base effect': it is necessary to try very much that in the background of a disastrous beginning of 2015 to look even worse. But, as you know, the winners are not judged.
Even low oil prices (given their terribly low level in January 2016) could not stop the growth of the industry: average price of Russian oil Urals in January-April 2016 decreased by 37.5% and accounted to $33.93 per barrel. In January-April 2015 the average price of oil Urals was only $54,30 per barrel. Its nearly 40% decline in world oil prices was only partially offset by the devaluation: the average nominal US dollar rate for January-April 2016 grew by 21.5% in comparison to the index in 2015 and accounted to 72.53 rubles. The euro growth is almost the same (+20.7%).
This insufficient offset affected the financial results: in January-March 2016 the amount of profit in the Republic of Tatarstan in the sector of 'oil production' amounted to 31 billion rubles, with the total profit at 38 billion rubles a year earlier. As you can see, there is a shortfall at 7 billion rubles of profit. But, at these low prices, our 'oil production' is still in profit!
However, in other sectors of the economy, from the point of view of profits, not everything went smoothly.
The total profits of enterprises of Tatarstan for the period January-March 2016 (87.2 billion rubles) in comparison with the period January-March 2015 (88.2 billion rubles) have almost unchanged, however, the total losses, in contrast, have risen sharply to 21.3 billion rubles, in comparison with 13.2 billion rubles a year earlier.
The main profit generators
As you can see on the chart, nearly 2/3 of the total profit are given by only 3 industries: oil production, chemical production, and the production and distribution of electricity, gas and water
Main loss generators
There is the same situation with the total losses: 2/3 of loss are brought also by 3 industries: chemical industry, production of vehicles and equipment, wholesale and retail trade
Three supporting piles of Tatarstan economy
We have repeatedly written about the fact that the explanation of such survivability of our economy lies in the powerful increase in oil production and consequently, exports. If the dollar oil price is falling and the devaluation does not compensate adequately the fall, how do exporters react in order to compensate the fall in revenue? The answer is simple: they try to maximize the physical volume of production (extraction). Our oil companies did a good job. Thus, the group Tatneft for four months produced 9.2 million tonnes (+5.1% in 2015, +449 thousand tonnes).
The index of extraction of natural resources in RT
Strong growth of index of extraction of natural resources in February was due to an extra calendar leap day in 2016.
Annual growth rate of mineral production in Tatarstan
Due to the growth of the index of production of mineral resources in January-April 2016 by 4.3% (in Russia +3.1%), as well as associated with oil production branches of the economy of our country are growing, resistant to external shocks.
In the associated with the oil industry at the technological conversion, everything is fine: in the oil refining industry of Tatarstan the growth amounted to 2.1% (in Russia – decrease by 4.3%), chemical production of the Republic of Tatarstan volumes grew by +0.7%. Due to these 'three whales' (oil production, chemicals and refining) we do not fall into negative territory like the whole Russia, where the index of industrial production is worse than in Tatarstan (-0.1%).
Forecasting the situation on this sector for the next month, I am filled with even greater optimism: in April-May on the world oil market there has been upward rally — the price exceeded $50 per barrel, so everything will be well.
Optimism is everywhere
In other industries, everything is fine too: the industries aimed at replacing imports are growing rapidly: food, textiles, wood processing, agriculture, manufacture of rubber and plastic products.
The index of processing industries of RT
You can clearly see a month-to-month decreasing trend in the drop of the processing industry. If everything develops the same further, we will see the positive result of 'processing' in the coming months.
The production indices (January-April 2016 to January-March 2015)
TATARSTAN | RuSSIA | |
Processing industries in general | -0,2% | -1,8% |
Production of food products, including tobacco and beverages | 5,9% | 3,0% |
Textile and clothing manufacture | 29,6% | 2,0% |
Manufacture of leather, products of leather, footwear | 42,2% | 6,9% |
Wood processing and manufacture of wood products | 15,4% | -1,7% |
Production of rubber and plastic products | 3,2% | 3,6% |
Production of machinery and equipment | -8,8% | 4,4% |
Production of vehicles and equipment | -3,9% | -4,2% |
The processing industry of the Republic fell not as sharply (-0.2%) as in Russia (-1.8%)…
TATARSTAN | RUSSIA | |
The production and distribution of electricity, gas and water | 11,1% | -0,4% |
Housing construction | 1,0% | -14,3% |
Agriculture | 2,0% | 2,8% |
Freight turnover of motor transport | 13,8% | -2,2% |
Retail turnover | -1,1% | -5,2% |
A good phenomenon – the growth and stabilization of retail turnover at decent levels. This most striking indicator of consumer demand can reach a positive area soon.
In April of 2016 the retail turnover in comparison with March 2016 fell by 3.5%. It is a pity, if you look monthly dynamics (month to the previous month), in March, for the first time this year, retail began to grow (+10.7% on February 2016). Compare: February 2016 to January 2016 — 3.0%; January 2016 to December 2015 – 26.6%. But, in general, we can see a good level in the last 3 months.
Monthly retail turnover in million rubles
The growth of retail sales – a very good sign, it is largely due to the stop of falling in real money incomes and wages in comparison with the same period last year. Real disposable money income in January-March 2016 in Tatarstan in comparison with the same period last year has increased (+1.4%), real wages also have increased slightly (+1.3%). This stabilization is beginning to stimulate the population to increase consumption, so that in the near future, 'life will become better and funnier'.