Russian industry indicators showed growth for the first time in a year, contrary to the expectations of most analysts polled by Bloomberg. Growth is directly related to the military industry: the leaders are the production of finished metal products (+30.3% compared to March 2022, includes the production of weapons and ammunition), the production of computers, electronic and optical products (+22.5%, this the category includes all military electronics), as well as the production of “other vehicles” (+13.1%, this category reflects the production of aircraft and military equipment). Rosstat data indicate that the Russian economy has almost completely rebuilt on a war footing, economists say.
At the same time, the overall indicators of the industrial production index (which includes aggregated indicators for all sub-sectors and industries) increased by only 1.2% compared to March 2022. However, economists note that this is a good indicator, since March 2022 was the last month when production in Russia grew. The experts themselves expected that industrial production in March 2023 would decrease by about 1.4%. The boom in military production began in February, economists say, it coincided with a record increase in budget spending.
The leaders of the decline were the manufacturing industries: wood processing and the production of wood and cork products (excluding furniture) decreased by 11.3%, the production of medicines and materials used for medical purposes fell by 11%, the production of motor vehicles, trailers and semi-trailers – by 6.8%. The decline was also shown by the production of machinery and equipment (-5.1%), repair and installation of machinery and equipment (-5.1%), the production of textiles (-2.3%), etc. Separately, it is worth noting the decline in resource extraction — by 3.6%, as well as gas production – 15.3% less than in March 2022.
At the same time, the Russian authorities for the first time classified and did not publish data on oil production. This may be due to the fact that they did not keep their word and did not reduce oil production by the promised 500,000 barrels per day. The International Energy Agency (IEA) also hinted at this in a recent report: the Russian authorities could take such a risk in order to scare the market and provoke an increase in oil prices. This would allow Russian companies to reduce the discount on domestic grades of oil, and the budget to receive additional money. Sofya Donets, an expert at Renaissance Capital on Russia and the CIS, says the same thing: according to her estimates, the announced reduction in production did not occur.