04 August 2003 02:15
Some Stats Suggest an Economic Slowdown
The economy continues to hum along despite increasing investor jitters over the legal assault on Yukos, but there are
increasing signs that growth may be slowing.
About half of the major indices used to gauge business activity showed continued macroeconomic improvement in July,
while the other half pointed to a slowdown, which some analysts linked to the Yukos affair.
Moscow Narodny Bank's benchmark survey of 300 purchasing managers released Friday put the increase in
manufacturing activity in July at a record high, while hirings in the sector advanced at the fastest pace since November
2001.
Likewise, data collected by the government-affiliated Center for Economic Conjuncture showed an increase in assets
utilization to 56 percent in July, the highest level since May 1995, although just 1 percent higher than the previous
two months.
However, the State Statistics Committee's Business Confidence Index for the month was negative 3 percent,
reflecting deteriorating expectations on a monthly basis.
Likewise, the Association of Managers' index fell 3 percent in July, casting doubts on the government's
economic growth forecast of 5.9 percent for the year.
With the Yukos probe now in its second month and widening, economists said the August and September numbers will be
key to assessing how much damage the investigation has caused.
"I would rather look at three-month data to make a definitive conclusion as to whether growth is fizzling out,
but we do observe declines," said Edward Baranov, deputy director of the Center for Economic Conjuncture.
Baranov said several industries, including automobile, steel and coal, are seeing the recovery they enjoyed in the
second quarter begin to stall.
The Association of Managers' index showed a sharp drop in businesspeople's expectations, which was linked
directly to Yukos.
Alexander Grishunin, a spokesman for the association, said the index predicts changes in the economy one and two
months down the road, so the decline in July bodes ill for economic growth.
"It could be that the Yukos story had its impact," said Olga Belenkaya, economist at the Olma brokerage.
"But it is too early to talk about trend changes in definite terms."
Gross domestic product in the first half of the year grew 7.2 percent, exceeding nearly everyone's expectations,
including the government's.
Most economists, however, said it is still too early to gauge the effect the Yukos affair is having on the economy as
a whole, and that the monthly indices are used to alter short-term forecasts.
"We look at the expectations index reported by [Sergei] Alexashenko's Development Center," said Yevsey
Gurvich, head of Economic Expert Group. "We factor it into our short-term forecasts for industrial
output."
Unless hard-core numbers drop into the red zone, however, the markets are unlikely to be affected by the monthly
indices.
"Macroeconomic data is not the driver of the market," said Alexei Kazakov, senior strategist at NIKoil.
"But when markets are jittery they become very sensitive to negative news."
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