Russia: Industrial output weakness may prove temporary - ING

"The slowdown of industrial output to 2.1% year-on-year in September from 3.7% YoY in the prior eight months is a result of an adverse calendar effect," note ING analysts.

Key quotes

"Stable corporate lending growth combined with favourable calendar and base effects ahead suggest the figures are likely to be solid in 4Q18. Yet longer-term prospects are more uncertain."

"We believe the current mood in the Russian real sector is stable, at least in the short-term, as the recently published Bank of Russia data indicates a gradual acceleration in corporate lending growth to 9% YoY in September (adjusted for FX revaluation effects) from 5% YoY as of mid-year and zero growth in 2017. We take this as an indication that the Russian corporate sector may have intensified local borrowing as a substitute for the declining foreign debt." 

"In the meantime, the prospects for 2019 appear less certain, as the real sector may be negatively affected by 1) the ongoing external uncertainties which may affect global trade growth, 2) the potential deterioration of consumer sentiment following the end of the local electoral cycle and the upcoming VAT hike in 2019 and 3) the resulting halt in the interest rate policy easing cycle."