Russia's industrial production accelerated in January to 4.6% y/y, the highest in three months and up from 2.7% in December, Rosstat reported on February 29.  (chart)

Industrial production was high for almost all of 2023 as a result of the military Keynesianism bump the economy has enjoyed from heavy state spending on military production.

However, performances varied across different sectors. The mining sector saw a modest annual increase of 0.8%, while manufacturing industries experienced a more robust growth of 7.5%. The sectors providing electricity, gas, and steam also enjoyed a 4.6% boost, with water supply, sanitation, and waste disposal services witnessing a 3.5% growth.

Particularly noteworthy were the leaps in the production of high-tech and consumer goods. The production of computers, electronic and optical products surged by 54.6%, and the automotive sector, covering motor vehicles, trailers, and semi-trailers, saw a 50.2% increase. Sanctions and exit of international companies have forced Russian companies to invest heavily in localising production in the most effected sectors like automotive and after two years of war these investments are starting to bear fruit, climbing from a low base.

Furniture production and the manufacture of finished metal products, excluding machinery and equipment, also saw significant gains of 34.1% and 19.8% respectively.

Some other sectors fared less well. The production of coke and petroleum products experienced a decline of 4% in the wake of Ukraine’s long-range drone attacks on Russia’s refineries in the last two months. Metal ores and other finished products also seeing decreases of 1.2% and 0.4% respectively.

A ministry spokesperson highlighted the mixed results, stating, "Despite a number of positive trends, it is necessary to note a decline in the growth rate of industrial production in manufacturing industries in January 2024 compared to December 2023, which is a traditional seasonal factor characteristic of the initial period of the calendar year."