Page 48 - RusRPTNov23

output.
Russia’s economy has been doing remarkably well. Prime Minister Mikhail Mishustin said at a conference last week that “the worst is over” and hiked the forecast for growth this year again to 2.8%, although growing inflation and high interest rates are expected to slow the economy over the next three years somewhat.
Russia’s PMI indices show that on the ground business is flourishing on the back of heavy military spending that was increased in Russia’s 2024 budget to RUB10.8 trillion ($112bn) or 6% of GDP which has given industry a bump. Moreover, thousands of Russian soldiers returning home with large pay packages have also given a boost to consumption, which is apparent in the service sector PMI.
S&P Global’s September data indicated a strong rise in business activity at Russian service providers. Although expansions in output and new orders slowed on the month, the rates of growth remained sharp overall thanks to a sustained uptick in client demand. New export orders expanded at a survey-record rate, amid reports of successful outreach to new customers, S&P Global reports.
“Russian service providers recorded a steep rise in new orders during September. Despite easing slightly, the rate of growth was among the strongest in the past year. Firms attributed the increase to sustained customer demand and an expansion in client bases,” S&P Global said.
Concurrently, new export orders grew again and contributed to the rise in total new sales. The pace of expansion accelerated notably and was the sharpest on record (since September 2014). Companies stated that successful marketing led to a greater outreach to new customers, with demand conditions in some key export markets also improving.
Increased new business spurred firms to expand their workforce numbers in September. Employment rose for the second month running, but at only a fractional pace. Although businesses sought to broaden capacity, resignations reportedly hampered efforts.
Backlogs of work continued to grow, albeit at a softer pace, but the rate of job creation slowed notably to only a fractional rate. Resignations weighed on employment growth, despite firms' expectations for future output strengthening to the highest since May 2019.
Despite all the good news, Russia’s one economic problem remains elevated inflation, which was up to 5% in July. The ruble has also been weakening and crossed the important RUB100 to the dollar mark again on October 3 for the
48 RUSSIA Country Report November 2023 www.intellinews.com