Page 43 - RusRPTJan23

4.0 Real Economy 4.1 Industrial production
Industrial production in Russia decreased 2.6% y/y in October of 2022,
following a 3.1% fall in the previous month and compared with market expectations of a 3.8% decline.
It was the seventh consecutive month of falls in industrial activity, as output went down for mining (-2.7% vs -1.8% in September); electricity, steam, and air conditioning (-2.4% vs -1.5%); manufacturing (-2.4% vs -4%) and water supply, wastewater disposal, and the collection and organisation of waste (-7.4% vs -7.5%). On a monthly basis, industrial production jumped 5.3%, following a 0.5% increase in September, according to Rosstat.
There are continued problems in the timber producing regions of the Northwest, in regions with automotive industry and machine building, coal mining, metallurgy (most of these face a loss of export markets and transit bottlenecks) and now also in gas producing regions.
Siberia and the Far East are still doing relatively OK, with some notable exceptions. But due to a lack of infrastructure and very concentrated investments into a handful of big projects, there's a limit to how much these regions can heat up as others cool down.
Importantly, problems with industries will not break regional finances just yet. With some exceptions, most regions are on track to meet their plans for corporate income tax receipts in 2022 (according to official numbers).
This however is, to a considerable extent, due to high receipts in H1. At the end of July, the picture was much rosier still. Then nine regions had collected less than 50% of planned corporate income tax, now 17 collected less than 80%.
Even if the situation still worsens before the end of the year, the federal budget will likely simply increase transfers for now. But these problems will continue and receipts - including personal income tax, which has been fairly stable so far - will drop further in H1 2023.
43 RUSSIA Country Report January 2023 www.intellinews.com