Economy continued to recover in May

RUSSIA ECONOMICS - In Brief 28 Jun 2023 by Evgeny Gavrilenkov

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Recent statistics published by Rosstat suggest that the Russian economy keeps recovering from the groundbreaking 2022 shock and multiple aftershocks that keep coming in the form of regular sanctions. The new data suggest that the output of the five basic sectors grew y-o-y by 2.1% in 5M23 and 8.7% in May as the low base effect was particularly strong. Industrial output increased y-o-y by 1.8% and 1.7% over the same periods. Seasonally adjusted industrial output grows m-o-m since October almost steadily (the only exception was January). Last month's seasonally adjusted industrial output increased by 0.7% m-o-m which is generally comparable with previous months. The mining segment grew in May by 1.9% but was still down in 5M by 1.0% (both y-o-y). Growth in the manufacturing segment accelerated to 4.8% y-o-y in 5M23. In May it grew by 12.8% y-o-y. It now seems that in 2023 as a whole mining growth will move to positive territory, while manufacturing growth could be close to double-digit levels as the recovery gathers pace in many branches of manufacturing. Metallurgy grew in 5M23 and May by 4.2% and 10.0% y-o-y. Strong double-digit growth was recorded in metal-working, electronics, and electrical production. The industry may grow by about 5% this year. Strong recovery was seen in the trade segment, construction, while agriculture performed moderately. By the end of this week, we plan to digest recent statistical data and come up with an updated (and upgraded) macroeconomic forecast.