Russia’s Industrial Production Moves To A War Footing As Growth Is Up 6.5% In June
Russian industrial productivity shows sharp increases as the economy moves to a war driven manufacturing footing to support the Ukraine conflict while protecting consumers
The Russian Federal State Statistics Service (Rosstat) has said that in June 2023, industrial production in Russia increased by 6.5% compared to June 2022. This follows a rebalancing of the economy, which has been placed on a war footing to help the country support the on-going conflict in Ukraine – and maintain Russia’s own consumer growth ambitions.
Russia’s industrial production growth has ranged from 1.2% in March, to 5.2% in April, and 7.1% in May. The overall H1 industrial growth indicator was 2.6%, but this hasn’t yet reflected the new economic surge Russia is currently undergoing.
The main driver of growth is the increase in output in manufacturing industries (growth by June 2022 by 13.1%, by May 2023 by 5.5%), Rosstat notes.
The growth of the production index by June 2022 was also demonstrated by the energy sector and industries related to water supply and sanitation, waste management and pollution elimination, by 1.8% and 3.0%, respectively.
However, compared to May 2023, the production index in the electricity and thermal power industry, as well as in industries related to water supply and sanitation, waste disposal and pollution elimination, decreased by 10.7% and 0.1%, respectively.
In the commodity sector, production volumes decreased both by June 2022 by 1.7%, and by May 2023 by 1.9%.
Industries that posted significant year-on-year growth in June included:
Ukraine Conflict Support Production
- Production of computers, electronic and optical products (+71.6%);
- Production of vehicles, trailers and semi-trailers (+51.7%);
- Production of other vehicles (including aviation equipment, shipbuilding, etc.) (+26.1%);
- Production of machinery and equipment not included in other groups (including machine tool building, production of metallurgical, mining equipment, agricultural machinery, etc.) (+15.1%).
- Production of finished metal products (except for machinery and equipment) (+45.8%);
- Production of electrical equipment (+32.1%);
- Production of rubber and plastic products (+15.7%);
- Extraction of other minerals, including stone, crushed stone and sand, (-14.8%);
June 2023’s passenger car output reached 42,000 units, which is 3.1 times more than in June 2022.
14,300 Petrol driven trucks were assembled, which is 37.8% more than in June 2022 and 9.4% more than in May 2023. In January-June, 75 thousand trucks were manufactured, which is 5.8% more than in the same period in 2022.
Diesel Trucks saw 3,700 units produced in June 2023, which is 45.5% more than in June 2022, many of which will be for military purposes as Russia gears up for an extended conflict in the face of the Ukranian President’s unwillingness to engage in peace talks and continue Kiev’s disagreements with Moscow on the battlefields.
Consumer Support Production
- Production of tobacco products (+26.3%);
- Production of leather and leather goods (+17.6%);
- Production of beverages (+1.0%);
Food production in June 2023 increased by 5.4% compared to June 2022. In general, in the 1st half of 2023, food production increased by 5.3% compared to January-June 2022.
Cattle, pork, lamb, goat meat, horse meat and other animal meats produced in June 2023 reached 296,500 tonnes, a 6.4% increase over June 2022. 638.4 tonnes of fresh or chilled fish fillets were produced in June 2023, 1.1% more than in June 2022.
In June 2023, 465.7 thousand tonnes of milk were produced, which is 2.2% more than in June 2022. Bottling of natural mineral water and drinking water amounted to 1.9 billion half litres. This is more than in June 2022 and May 2023, by 16.8% and 2.7%, respectively.
According to Rosalkogolregulirovanie, the production of vodka in June 2023 decreased by 4.3% compared to the same period in 2022, amounting to 6.1 million decilitres. Wine production decreased by 12.5% compared to the same period last year (up to 2.6 million decaliters), sparkling wines and champagne by 19.3% to 755.6 thousand decaliters. Alcohol consumption in Russia is declining at the present time as increasing degrees of social sobriety exist while the conflict continues.
Supermarkets, however, are full of produce, including foreign consumer goods. Moscow has managed to balance the increased supplies and production for its military needs with a high level of domestic consumer population requirements, including the importation of Western goods, increasing both domestic production and imports from its neighbours to the east with an even keel and without long-lasting supply chain disruptions.
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