Russia’s industrial production growth slowed to 2.7% year on year in December 2023, implying year-end growth of 3.5% y/y (after +0.7% y/y in 2022), while on a seasonally adjusted basis, the composite industry output index in December remained at the previous month's level in m/m terms, according to the latest data by RosStat statistics agency.  (chart)

As followed by bne IntelliNews, despite the fallout from Russia's full-scale military invasion of Ukraine, the manufacturing sector and the industry ended 2022 with a historically strong expansion in output. Manufacturing PMI throughout 2023 continued to trend in positive territory.

Renaissance Capital commented on February 1 that industrial growth in December was below the expectations. “Given the dynamics of the previous year, the growth rate of industrial production will continue to slow down, especially in 2Q24,” the analysts expect.

The best 2023 dynamics were demonstrated by industries such as furniture, computers, electronic and optical products, motor vehicles, and pharmacology. 

“Manufacturing played a decisive role in the growth of industrial production in December and in 2023 as a whole (+5.1% y/y in December and +7.5% in 2023), while extraction industries had a restraining effect (-1.1% and -1.3% y/y, respectively),” RenCap notes.

In 2022 and 2023, the persisting gap between services and manufacturing suggested that both heavy and light industries could be supported by state demand for the war effort in Ukraine. The breakdown of the industrial output in early 2023 confirmed that the industry is indeed increasingly dependent on Russia’s war.