Page 62 - RusRPTApr23

from the July low when car production Russia came to a screeching halt.
The recovery in the sector has largely been driven by Chinese and Iranian firms that have rapidly moved in to take over the hole left by departing European Original Equipment Manufacturers (OEMs) and US carmakers, which have pulled out en masse.
Russia's economic situation is showing signs of improvement with decreasing budget deficits that alarmed experts in January, The Bell reported on March 13.
Both economic analysts and households are displaying cautious optimism. The International Monetary Fund's (IMF) prediction of 0.3% GDP growth in 2023 could be achieved if there are no significant external shocks such as a sharp decrease in Russian energy prices or new rounds of sanctions.
According to Central Bank analysts, the primary driver of growth and optimism is internal demand, fuelled by the government's generous budget spending. However, if the spending stops, the growth will also halt. Expenditure in January and February has increased by 51% to 5.75 trillion rubles compared to the same period last year. Meanwhile, revenue has dropped by almost a quarter to 3.16 trillion rubles, resulting in a budget deficit of 2.5 trillion rubles, nearly 88% of the planned figure.
February's numbers have shown slight improvement compared to January's, with the monthly budget deficit falling from 1.8 trillion rubles to 0.8 trillion rubles. This is already fairly close to historical norms (in February, the government spent 8.9% of its entire planned expenditure for the year, compared with a historical norm of 7%), the Solid Figures Telegram channel noted.
However, an increase in spending is also slowing down, and February's expenditure of 2.63 trillion rubles is already near historical norms. More detailed data on budget spending shows that there was a slowdown in expenditure in the second half of February, which the Finance Ministry explained as the high level of spending at the start of the year on advance payments for government contracts.
In the manufacturing sector, high expenditures contributed to increased production, Central Bank analysts pointed out. In January (February’s figures will not appear until late March), the biggest growth was in sectors related to the military-industrial complex: vehicle manufacture (including aviation technology and shipbuilding) was up 27.4%; computers, electronics and optical products was up 5.5%; clothing was up 5.5%; metal components (not including machinery and equipment) was up 3.6%.
In the raw materials sector over the same period production of coal (-3.5%), oil
62 RUSSIA Country Report Russia April 2023 www.intellinews.com