Actuality January–July 2007.

The rates of growth of industrial production in Russia remain high. In January–July 2007 Russian industry increased the output by 7,7% as compared to the same period in 2006. Also July growth in annual terms made 7,8%, slowing down a little as compared to June, when it got to 10,9% of June, 2006 level.

However, experts note that long-term trend stays positive at high level which was formed during the first months of this year.

It became the result of considerable inflow of foreign capital to the country, which creates the necessary prerequisites for dynamic development of main industries of economy and industry first of all processing one.

Indeed, processing industry in July increased the output by 12,5% as compared to July, 2006, and according to the results of 7 months of this year by 12,2%. In extractive industries growth made 1,2% in July and 2,7% from the beginning of the year. In the energy sector the decline (on the level of 3,1%) which was caused by the warm winter and low production volumes of energy in January–April still continues from the beginning of year.

In spite of the fact that in July growth of production and distributing of electric power, gas and water made on average on the whole country 3,3%, it does not still allow the industry to reach indexes of the last year.

Statisticians note that according to the results of January–July the oil extraction (including gas condensate) made 285 million tons,

having increased by 2,8% as compared to the same period of 2006.

The gas production went down by 0,3% and made 382 billion cubic meters.

The iron ore production made 60,7 million tons, or by 3,2% more than the previous year. In July the dynamics of production of these main kinds of raw materials appeared to be below the average rate of previous 6 months. Only production of coal in July made by 3,6% more than in July of the last year, although according to the results of January–July production went down for 0,1% and made 176 million tons.

Oil processing and production of main oil products is ramping up as compared with oil production. It is explained by the unstable dynamics of prices for raw materials which sharply became cheaper at the beginning of the year. And although now world oil prices are again close to historical maximums, it is not inspiring advance growth of oil companies’ quotations. In addition, though there was rise in Brent oil price during the last days it didn’t provoke price rise of the Urals mixture. In this situation oil companies which are doing both

oil production and oil processing benefited from it.

The primary processing of oil in January–July of this year grew by 5,2% as compared to the same period of 2006 and made 132 million tons.

The production of motor petrol increased by 5,8% to 20,4 million tons.

Diesel fuel also increased its production by 4,5% compared to the last year, and fuel oil increased by 5,7%.

As before production of building and finishing materials grows rapidly that is supported by the intensive dynamics of development of building and real estate sector, which this year again became attractive for investors. Production of cement increased by 16,4% in January–July as compared to the same period of 2006 and made 33,9 million tons, of brick — by 12,7% (7,2 billion pieces), of precast construction and wares — by 15,1%, of large building blocks — by 19%, of soft roofing and isolating materials — by 6%, of ceramic veneers — by 8,3%, of fiberglass plastics and wares — by 9%, of polyvinylchloride elastrons— by 11,8%. Also there is a positive dynamics in wooden building materials: the production of lumber bettered index of  January–July, 2006 by 2,2%, of scale board — by 1,3%, particle boards — by 14,3%, hard fiberboards — by 5,4%. In addition, polyvinylchloride linoleum was produced by 41,3% more than in January–July, 2006.
Some experts note that there is unstable situation with production of flour, bakeries and macaroni foods, which is explained by the small harvest of corn in Russia and Ukraine because of hot summer. Negative expectations on the harvest of this year make agricultural enterprises and gra in purchase organizations to hold reserves figur

ing on the price rise in the nearest time. With that experts explain the decline in panification by 1,7% (to 4,4 million tons), in flour production — by 3,4% (to 5,5 million tons), in macaroni foods — by 6,3% (to 573 thousand tons) as compared to January–July, 2006. Indeed, in Russia only during July the suggested retail prices for bread grew by 7,2%, that create favorable conditions for inflation.

In July, 2007 as compared to July, 2006 panification in Russia went down by 2,7%, macaroni foods — by 6,9%; production of flour increased by 4%.
Among branches of industry providing steady growth this year it is particularly necessary to mark out mechanical engineering. In spite of stability of ruble and rising competition for the Russian producers with western machine-building companies, steady positive dynamics is continued there.

In special dem and the products of special mechanical engineering are,

and also mean of production, used in mining and their primary processing. According to Federal Service of State Statistics, in January–July the production of steel pipes increased by 20,7% as compared to the same period of the last year, of steam-turbines — in 2,1 times, of hydraulic turbines — in 3,4 times, of tower cranes — by 30,7%, of rolling-mill machinery — by 10,6%, of wheel-mounted tractors — by 19,3%, crawler-mounted tractors — by 13,9%. Production of computer aids increased by 18%.
Motor industry also demonstrates positive dynamics: truck production increased by 19,5% as compared to January–July, 2006 and made 158 thousand of cars, autos — by 10,1% and 714 thousand. Production of tractor trailers and semi trailers (by 69,8%), mobile and industrial diesel engines grows (by 32,3% — due to the purchases of the Russian Railways). Railway carriages are also in popular demand: freight stocks are produced by 5,2% more than the last year, passenger stocks — by 19,8%. Busses are produced by 5,9% less than in January–July of the last year, 46,1 thousand

of them.

Most of experts are sure, that to the end of 2007 dynamics of industrial production growth will be continued at present high level.

Therefore according to the results the year production growth will make about 7,5–7,7% instead of 5,2% built into conservative prognosis by the Department of Economical Development of Russia.