Industry posts increasingly unimpressive performance

RUSSIA ECONOMICS - In Brief 23 Oct 2025 by Evgeny Gavrilenkov

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Rosstat reported that industrial output grew by 0.7% y-o-y in 9M25. In 3Q25 and September alone, it increased by 0.5% and 0.3% y-o-y, respectively. However, seasonally adjusted figures show the industry contracted by 1.0% m-o-m last month. The mining sector seems to be stabilizing, though still in negative territory, with a 2.1% y-o-y contraction in 9M25 but a 0.2% y-o-y growth in September. In the third quarter, it contracted by just 0.8% y-o-y. The manufacturing segment showed a clear slowdown, rising 3.7% y-o-y in 1H25 but only 1.4% in the third quarter, with a modest 0.4% y-o-y growth in September alone. The manufacturing sector is slowing down across the board, although defense production remains robust. With the rest of domestic demand under strain, production of many non-military goods fell in 9M25. Even food production dropped by 0.6% y-o-y during this period. The ruble's excessive strength (USD/RUB hovering near 80) has made locally produced goods less competitive, and exporting manufacturing products has become challenging due to the currency's abnormal valuation. Industrial statistics once again suggest that the growth model developed in recent years, which focused on heavily funding specific manufacturing industries tied to the defense sector, is not universally applicable and would ideally need some adjustments.