Russian Industrial Production Grew 5.2% In April 2023
Russia’s continuing market resilience and pivot east has been underlined by the Federal State Statistics Service (Rosstat), who have stated that in April this year, the national Industrial Production Index (IPI) increased by 5.2% compared to April 2022.
That rebound follows a relatively weak Q1 2023, with January’s industrial output declining by 2.4%, February’s by 1.7% but showing an increase in March to 1.2%. The growth in April’s industrial production was however recorded against the backdrop of a very low base in April 2022.
Overall, in the January-April 4M figures, Russia’s national increase amounted to 0.6%. It should be noted that IPI differs from Gross Domestic Product (GDP) which measures the price paid by the end-user, including value-added in the retail sector, which IPI ignores. This suggests that Russia’s GDP growth rate is currently higher than the IPI rate.
Excluding seasonal and calendar factors, in April 2023, according to Rosstat; actual industrial production grew by 1.7% compared to March after an increase of 1.3% a month earlier.
Russia’s April Industrial Production data turned out to be much better than forecasts. The consensus forecast of analysts polled by Interfax in early May suggested an overall 2023 increase in industrial production by 3.1%.
That compares with the European Union, which according to its Eurostat, the EU’s statistical agency, showed GDP fell by 0.1% in the first quarter of 2023, meaning it is now technically in a recession. The EU forecast for 2023 as a total is currently predicted to result in a 1% GDP growth rate.
At the other end of Eurasia, to the East, Kazakhstan’s GDP grew by 4.9% in Q1 on the back of increased Russian trade flows east, with a 2023 total World Bank forecast of 3.5%. China’s Q1 GDP grew by 4.5% in Q1 with the World Bank predicting 2023 GDP growth will reach 5.2%.
These figures are a clear indicator that trade flow trends are heading East, not West.
According to Rosstat, the main driver of Russian growth in the IPI in April was an increase in output in manufacturing industries, with an increase of 8.0% against April 2022. Mineral extraction increased by 3.1% compared to April 2022.
The energy sector showed a decrease in the index both compared to April 2022 and compared to March 2023 by 1.4% and 14.6%, respectively. Industries related to water supply and sanitation, waste management and elimination of pollution decreased production volumes by 1.2% compared to April 2022, but increased them by 7.3% compared to March 2023.
In the primary sector, April’s coal production increased significantly by 8.4% compared to April 2022, while mined metal ores increased slightly by 0.5%. The extraction of other minerals, including stone, crushed stone and sand, fell by 12.4% compared to April 2022 as Russia’s industrial production focused on military related as opposed to construction material demands.
Data concerning the Russian dynamics of oil and gas production has been suspended in accordance with the order of the Russian government dated April 26, 2023 No. 1074-r.
For the first four months of 2023, the manufacturing industrial sector increased by 2.9% compared to the first 4M of 2022. However, there were decreases: 7.9% declines in industries related to water supply and sanitation, waste management and pollution elimination, meaning the current industrial focus will have later clean up repercussions.
Russia’s Growth Industries 2023
- Production of finished metal products (except for machinery and equipment): +30%
- Production of electrical equipment: +29.3%
- Production of vehicles, trailers and semi-trailers: +27.3%
- Production of computers, electronic and optical products: +23.8%
- Production of coke and oil products: +15.9%
- Furniture manufacturing: +14.4%
- Production of other vehicles (including aviation equipment, shipbuilding, etc.): +11.7%
- Production of leather and leather products: +11.5%
- Coal mining: +8.4%
- Production of chemicals and chemical products: +7.7%
- Production of rubber and plastic products: +6.7%
- Food production: +5.4%
- Tobacco products: +4.8%
- Metallurgical production: +4.8%
- Textiles and clothing +3.3%
Russia’s Declining Industries 2023
Production of machinery and equipment not included in other groups (including machine tool building, production of metallurgical, mining equipment, agricultural machinery, etc.): – 17.4%
- Printing activities and copying of information carriers: – 15.0%
- Extraction of other minerals, including stone, crushed stone and sand: – 12.4%
- Wood processing and production of wood and cork products: – 9.7%
- Production of medicines and materials used for medical purposes: – 9.0%
- Repair of machinery and equipment: -5%
Other Comments
Russian food production in April 2023 increased by 5.4% compared to April 2022, but decreased by 5.5% compared to March 2023. In general, in January-April 2023, food production increased by 4.9% compared to January-April 2022.
Passenger car production in April amounted to 26,400 units, which is 33% more than in April 2022, but 18.8% less than in March 2023. In January-April 2023, 113,000 thousand cars were produced, which is 57.2% less than in January-April 2022.
14,000 thousand trucks were assembled, which is 15.1% more than in April 2022, but 6.2% less than in March 2023. In January-April 2023, 47,600 thousand trucks were manufactured, which is 10.0% less than in the same period in 2022.
Diesel engine truck production amounted to 3,600 units, which is 14.5% more than in April 2022, but 10.8% less than in March 2023. In January-April 2023, 11,700 diesel trucks were assembled, which is 20.0% less than in January-April 2022.
Source: Finmarket