Industry’s performance remains unimpressive in August

RUSSIA ECONOMICS - In Brief 25 Sep 2025 by Evgeny Gavrilenkov

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Although Rosstat reported a seasonally adjusted output increase of 0.7% m-o-m in August, this figure seems weak considering the contractions of 1.6% in June and 0.6% in July. For 8M25 and August alone, industry grew by 0.8% and 0.5% y-o-y, pointing to an overall growth of around 0.0% to 0.5% for 2025. The mining segment declined by 2.4% and 2.5% y-o-y in 8M25 and August, while the manufacturing segment saw y-o-y growth of 2.4% in August and 3.2% in 8M25. Deceleration y-o-y is evident across the board, as smaller industrial segments like power generation/gas supply/heating and water supply/treatment also contracted, with the former dropping by 2.2% y-o-y and the latter by 3.9%. Notably, Rosstat recently revised industrial statistics for 2024 upward, which could have negatively impacted this year’s industry growth rates. Apart from the mining sector, consumer-oriented sub-segments of manufacturing experienced steep declines. In 8M25, food production dropped by 0.9% year-on-year, while car production fell by 2.9%. The production of construction materials also saw significant decreases. Consumer demand has remained weak for nearly a year following previous overheating. With the CBR reducing the base rate by just 100 bps to 17%, household credit activity is expected to stagnate in the near future. As of July (the most recent data), the average interest rate for household credits with maturities over one year was 18.23%, while shorter-term credits (up to one year) were even more expensive at 29.23%. Since Russia’s growth model depends heavily on a kind of special government spending, and interest rates are likely to remain high, economic growth in 2026 is unlikely to impress...