Actuality January 16, 2008

   Fast industrial growth

in 2007 is caused not only by demand growth, but the competitiveness of enterpr ises working in Russia has increased.

   For a year industrial production growth, according to Center for Macroeconomic Analysis and Short-term Forecasting (CMASTF), made 6,4 % (according to Goskomstat (Federal State Statistics Service) – 6,3 % for 11 months, 3,9 % for 2006). Manufacturing activities became the motive power because of the improved indicators practically in all branches, the economist of CMASTF Vladimir Salnikov

explained at the report presentation in United Nations Information centre.

   27 % of industrial production growth has provided the mechanical engineering, which rates of growth made 23,9 %. The year before the growth was 3,3 % 2006. The next two leaders by the contribution to the general growth of the industry are food industry and production of vehicles (13,3 % and 11,6 % of the general growth of industrial production).

   The growth basis was the fact that Russian enterprises had learnt to compete for

the consumer, considers Salnikov.

Two years ago in response to the demand increase by 1 % the domestic production increased production output by 0,4 %, the rest part was covered by import.

In 2007 it was already 0,8 %. That means that support of demand growth by means of the domestic goods has increased twice to 80 %. Salnikov defines, that it is necessary to understand foreign enterprises under Russian ones working in the territory of Russia.

   The growth of some markets led to the situation that it became more pr

ofitable to invest in manufacture in Russia, than to export finished product. The wave of import substitution touched upon agricultural proceeding industry (intermediate production of frozen food), car industry. The raw materials for plastic articles which was completely imported earlier, now is by one third produced in the domestic market, Salnikov gives an example.

   Demand for highly effective products grows, and in order to keep the market, it is necessary to offer new equipment, Anatoly Meshcheryakov from CJSC Transmashholding tells. Output growth for one third demands increasing investments into research and development and modernization by as many, he says.

   The competition in building will become tougher also through the efforts of the state, which improves the legal base, the general director of Krost Alexey Dobashin says, and in 2-3 years the rate of gain of builders will approximate the European one – 12-15 % against 25 % presently.

   According to the poll of businessmen of the Center for Strategic Studies of Goskomstat (more than 3000 respondents in 15 cities), the enterprises optimistically look not only at 2008, but also at perspective in 5-7 years. There are 36 % and 42 % respectively more than pessimists of those who gave positive appraisals.

   However, the fast growth of the markets can lead to decrease in competition and efficiency of enterprises, Salnikov warns, also negative influence on the industry of its old problems, such as lack of capacities and infrastructure, will intensify in 2008.

It can cost the industries the loss of rates for 1-1,4 %: the forecast of CMASTF for 2008 is 5-5,4 %.