The Russian industrial growth to be in the red in 2022

RUSSIA ECONOMICS - In Brief 26 Oct 2022 by Alexander Kudrin

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Rosstat reported that the Russian industrial output was up by 0.4% y-o-y in 9M22. Even though y-o-y growth was less negative in 3Q22 (-1.3%) than in 2Q22 (-2.5%), it looks as though in 4Q22, the contraction is likely to deepen, and in 2022 as a whole, industrial output will contract. In September alone, the industry was down by 3.1% y-o-y, and seasonally adjusted m-o-m growth was also negative (-0.4%). The mining sector was up by 1.9% in 9M22 but posted a zero y-o-y growth in 3Q22. The manufacturing was up by 0.3% y-o-y in 9M22 but down by 2.0% y-o-y in 3Q22. Industrial performance continued to be very uneven across sectors. Some domestically oriented segments, such as food or construction materials, continued to grow, albeit showing some deceleration. Car manufacturing and production of consumer durables were down as foreign companies fled Russia. Most export-oriented segments contracted. For instance, the timber and woodworking industry shrank by around 20% in September and 10% in 9M22 (y-o-y in both cases). Machinery and metal-working segments have also contracted. Natural gas extraction was down by 26.4% y-o-y in September and 12.1% y-o-y in 9M22. The chemical industry was also down. Oil extraction grew in September and 9M22 by 0.6% and 2.8% y-o-y. The current trends in the industry as a whole do not yet point to clear tipping points. Evgeny Gavrilenkov Alexander Kudrin