Industrial production seems to have left behind the trough. The answer to the question to which extent the economy has overcome the trough is "so so".

Yesterday industrial production figures for July were announced. Seasonally adjusted level of production which had been decreasing month-on-month since February increased by 2.7 percent in July. This contradicts to the recent discourse that the economy has slowed down in the last couple of months. Of course no definite conclusion can be reached relying solely on the figures for a few months. But in the end, we are witnessing a considerable increase in the monthly industrial production.

When "non-tortured", that is, unadjusted original industrial production figures are used the change in production compared to the same period in the year before appears as below (Figure 1). The drastic increase in production witnessed during the first half of 2010 or first months of 2011 decreased to more moderate levels. The ratios were 8% in May, 6.7% in June and 6.9% in July.

The peak of industrial production in the pre-crisis period was recorded in March 2008, with adjusted figures. Figure 2 shows the outlook of industrial production adjusted to this peak (taken as 100). It is evident that we have overcome the trough that the production hit with the crisis. However, the level of production in July 2011 was only 3.9 percent higher than it was in forty months ago, at the peak in March 2008. It is a bit complicated: figures on monthly improvement contradict to the general slowdown discourse. Annual production figures, however, reflect a moderate increase. The answer to the question to which extent the economy has overcome the trough is "so so".

Industry was shaken

In fact, there is nothing complicated about this outlook. First, the global crisis has shaken the industrial sector severely. Second, despite the drastic improvement in the level of production, we are still performing "so so". Third, officials are not content even with this "so so" outlook. Fourth, behind this complaint lays the fact that the current level of production was achieved by high improvements in production. The "rapid" increase in production plays an important role in the hike of the current account deficit. Fifth, in order not to complain about the "so so" performance the structure of the economy which relies on the foreign borrowings for growth should be changed. Then comes the question: have any step been taken to this end over the three months since elections?

This commentary was published in Radikal daily on 10.09.2011