Industrial growth moderates but still looks not too bad

RUSSIA ECONOMICS - In Brief 26 Sep 2024 by Evgeny Gavrilenkov

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Russian industrial output grew y-o-y by 4.5% and 2.7% in 8M24 and August alone. In the latter case, according to Rosstat, it grew by 0.8% m-o-m in seasonally adjusted terms. In 1H24 industry grew by 5.0%. Some moderation of the y-o-y growth looked natural as in 2023 it grew by over 6.0% from August to October. Rosstat recorded some improvements in the mining segment, as following months of the y-o-y contraction, it grew by 0.1% y-o-y in August. As a result, mining was down by a mere 0.4% y-o-y in 8M24. The manufacturing segment grew by 8.1% y-o-y in 8M24, having posted a 4.7% y-o-y growth in August alone. Industrial growth remained uneven across segments ranging from a moderate y-o-y contraction in the coking coal and oil refinery to over 30% growth in metal working and electronic/optical equipment (including computers) production. Production of various kinds of vehicles grew by over 20%. Car production was up by 47.2% y-o-y in 8M24. As the industry keeps growing fast enough, Russia’s tax base also looks not too bad – including the non-oil-and gas taxes (especially amid elevated inflation). It looks like this year’s federal budget revenues will visibly exceed the amended plan. In a few days, the government will submit the 2025-2027 draft budget to the Duma along with its own estimates of the 2024 budget, and we'll follow up on these developments.