In the first half of 2019, there were hopes that global economic growth rates would be higher than the long-term trend. But the situation changed in the second half of the year. The trade conflict between the United States and China worsened as the risk of currency wars increased. The IMF estimated that total damage from the use of import duties in the global economy would stand at USD 700 bln by 2020 (roughly 0.8% of global GDP). In the fall of 2019, the PMIPurchasing Managers’ Index of the Institute of Supply Management (ISM). dropped to its lowest level since 2012.
As a result, the IMF slashed its estimate for the prospects of the global economy: global GDP growth in 2019 was estimated at 2.9%, the lowest level since the financial crisis a decade ago. The greatest pressure has been felt in the eurozone, where leading economies, particularly Germany, are on the verge of a recession. Furthermore, the IMF released its estimates before oil prices plunged and the global economy slowed as a result of the spread of coronavirus.
|Emerging and developing nations||7.4||6.2||5.1||4.7||4.6||4.0||4.3||4.7||4.5||3.7|
Source: IMF as of January 2020
|Industrial production, %||7.3||5.0||3.4||0.4||1.7||–3.4||1.1||2.1||2.9||2.4||2.4||2.6||2.9||3.0||3.1|
Sources: Rosstat and Forecast for Russia’s Socioeconomic Development of the Russian Ministry of Economic Development for the Period until 2024 dated September 30, 2019
According to the initial estimates of Rosstat, Russia saw its GDP expand by 1.3% in 2019. This figure was slightly lower than the preliminary estimates of the Ministry of Economic Development, which estimated that the Russian economy would grow by 1.4%. Russian GDP increased by 2.5% in 2018 (Rosstat adjusted the figure from 2.3%). The greatest impact on growth in the physical volume of GDP came from an increase in the added value of the mining and manufacturing industries, at 2.7% and 1.6%, respectively.
Industrial production increased by 2.4% in 2019. Positive trends were seen in all areas of industrial production, except for water supply, sanitation, and waste collection and disposal (down by 0.3% compared with the previous year). The highest growth rates were seen in the raw materials industries (3.1%). The manufacturing sector expanded by 2.3%, while growth of 0.4% was seen in the electric power industry as well as gas and steam supply.
An unusually warm winter, including in December 2019, resulted in adjustments to the typical home heating system in certain regions of Russia. Given the observance of the temperature schedule for heat supplies to consumers and the temperature difference between the outside air and inside housing that is atypical for this time of year, heat production by thermal power plants and boiler houses in Russia decreased and amounted to 89.5% and 91.2% of the level from December of last year, respectively.
Russia’s place in the global electric power industry
Global trends reflect electricity’s growing role as one of the primary sources of energy. According to the BP Statistical Review 2019, global electricity production has grown by 71% over the past 20 years, while hydrocarbon consumption has only increased by 45%.
These trends are also typical for Russia. The main drivers of growth in electric power consumption in the country are the increased use of household appliances, electrification, a higher level of rail transport as well as the growing share of the service sector in GDP (which consumes more electricity than other energy sources).
|Ranking||Country||Electric power generation by energy source in 2018, bln kWh|
|Oil and petroleum products||Natural gas||Coal||Nuclear energy||Hydro power generation||Renewable energy sources|| ||Total|
Source: BP Statistical Review 2019