Page 68 - RusRPTApr23

4.0 Real Economy 4.1 Industrial production
The Russian economy is showing signs of recovery in the first quarter of this year, as the rate of decline in industrial production slows, according to Rosstat data released on March 29.
Share of loss-making firms fell to 32.3% in January.
Industrial product contracted by 1.7% y/y in February, an improvement from January's contraction of 2.4%, Rosstat reports. Seasonally adjusted month-on-month data indicates a rise of 0.5%.
Manufacturing was the primary driver of the industry's pick-up, with increases in the production of motor vehicles, metals, and chemicals. While mining output growth stabilised at -3.2% y/y, seasonally adjusted terms suggest a slight increase due to a rise in oil production and metal ore mining.
Food and non-food sales rose by an estimated 0.5-1.0% month-on-month in seasonally adjusted terms, indicating a turn in consumer-facing sectors. However, households remain cautious about spending, as evidenced by surveys showing a growing share of consumers intending to save.
The latest data for February continues a run of relatively strong activity figures in recent months, indicating a recovery in Russia's economy towards the end of last year and the start of this year.
Business surveys have also shown a marked improvement since the beginning of the year. While oil production is expected to decline in March by 0.5mn barrels per day, it is likely that GDP expanded in the first quarter.
Russia's economy has demonstrated a much greater ability to weather sanctions pressure than had seemed likely since mid-2022. As a result, Capital Economics’ GDP forecasts for 2023 were revised up from -2.0% to -0.3%, which brings it in line with the earlier controversial World Bank estimate that Russia’s economy would grow by 0.3% in 2023.
In industry, the rate of decline in January was less than in previous months and amounted to 2.4% against 4.3% in December last year. At the same time, in the extractive sector, the dynamics worsened due to a decrease in oil production, while in the manufacturing sector, on the contrary, the rate of decline slowed down by almost half compared to December, and in the energy sector growth was observed due to colder weather.
68 RUSSIA Country Report Russia April 2023 www.intellinews.com