Industrial growth to moderate this year

RUSSIA ECONOMICS - In Brief 27 Mar 2025 by Evgeny Gavrilenkov

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Rosstat reported that in 2M22, the industrial output grew by a mere 1.2% y-o-y, which looked weaker than January’s 2.2% y-o-y growth. In February alone, the y-o-y growth remained almost non-existent (up by 0.2%). The unimpressive February growth figure largely stems from the base effect, as 2024 was a leap year. In seasonally adjusted (by Rosstat) terms, industrial output grew by 0.4% m-o-m, which was not too bad. A month ago, we mentioned that January’s unimpressive figure mirrored a too-impressive December 2024 y-o-y growth (by 8.2% y-o-y and 2.3% m-o-m in seasonally adjusted terms). We also suggested that it could have resulted from the fact that activity, under-accounted in previous months, was allocated to December numbers. Therefore, January 2025 data could have been skewed, as in seasonally adjusted terms, industrial output reportedly contracted in January by 3.3%, which looked too much. Still, these effects cannot fully explain unimpressive y-o-y growth numbers. We expect that Rosstat will revise industrial growth statistics, as for January and February 2025, m-o-m and y-o-y growth numbers do not fully match each other. All in all, we can conclude that the mining sector keeps contracting, and the contraction is likely to deepen this year - even though some segments, such as coal and metal ores extraction, do very well as government demand for metals and associated specific manufacturing products increases and keeps growing since 2022. However, gas extraction was down by 8.3% y-o-y in 2M25 and well above 10% in February alone. Rosstat no longer reports on oil production, but one may conclude that it shrank by 3-4% in 2M25, i.e., more or less in line with the rep...