MOSCOW, January 14, Natalya Dembinskaya. Under the yoke of Western sanctions, the country ended the year with impressive economic growth. First of all, the industrial sector helped. In Europe, on the contrary, there is stagnation. The recession has hit the entire eurozone, including the EU's locomotive, Germany. How Russia achieved such results is in the material.
And all four
The economy will add more than the predicted 3.5 percent, Vladimir Putin said in Khabarovsk at a meeting with entrepreneurs of the Far East.
«More than four percent? Well, maybe, yes. We have a decline, here's Mikhail Vladimirovich (Mishustin . — Ed.) said before leaving here, we always thought the fall in 2022 would be 2.1%, in fact it turned out to be 1.2%. <…> Therefore, maybe there will be more GDP growth» , the president noted.
And added, “this is an amazing result” in conditions when Russia is being “choked, pressed” from all sides.
As Minister of Economic Development Maxim Reshetnikov informed on December 30, GDP, according to preliminary estimates, will increase by 3.5%.
< h3 id="1921029188-2">Acceleration of production
According to Rosstat at the end of December, the economy grew by 5.5% in the third quarter. The department clarified that this is mainly the result of increased domestic final demand against the backdrop of a reduction in net exports.
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The economy was fueled by a rapid rise in industry. Thus, the November figures are a record for the last seven years. The global business activity index reached 54.6 in December (53.8 in November), calculated by S&P Global. Employment in the real sector is increasing at the fastest pace in 23 years.
The manufacturing industry added 7.5% over the 11 months of 2023.
“Against the background of an insignificant, but still a decrease (by 1.1%) in mining production, the successes of manufacturing industries (plus 7.5%) are especially noticeable, where the leaders are mechanical engineering (23.3%) and metallurgy (9.5%). and the chemical industry (6.2%),” points out Ekaterina Bezsmertnaya, dean of the Faculty of Economics and Business of the Financial University under the Government of Russia.
Construction, wholesale and retail trade are developing.
“Over ten months, retail turnover increased by 5.5% in annual terms — after falling in 2022 by almost nine percent due to lower consumer demand. A similar recovery is observed in many sectors,” says Natalya Milchakova, leading analyst at Freedom Finance Global.
Investment and reconfiguration
The main drivers of growth are state defense orders and budgetary investments in import substitution. Western brands have left, the usual supply chains have collapsed.
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“Enterprises quickly reoriented towards the domestic market. The disruption of supplies from abroad stimulated import substitution, modernization of the production and technological base and maximum capacity utilization. Promising niches have opened up for domestic goods. Thanks to high domestic demand, the workload of enterprises, according to our estimates, will remain maximum in the coming years,” explains Pavel Simonov, director of legal and corporate issues of the Rusklimat trading and production holding.
In the Bank’s analytical note Russia «Investment activity in industry in 2023: results of a survey of enterprises» states: two-thirds of 514 companies invested in maintaining and updating capacities.
These are primarily manufacturers of finished metal products, computers and electronics, electrical equipment, and furniture. An additional factor is projects launched in previous years, but postponed due to tightening sanctions.
Capacity utilization in the second quarter reached 80.9%, this is a historical maximum, the regulator stated.
Enterprises focused only on domestic demand: in the conditions of Western boycotts, many countries expressed their readiness to cooperate with Russia both as suppliers and as sales markets.
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Strengthening partnerships with the countries of Southeast Asia, Latin America, the EAEU and China will, over time, form a reliable basis for the harmonious development of export-oriented industries: petrochemicals, metallurgy, agriculture, light industry. Non-resource exports, despite sanctions pressure, will grow, predicts Pavel Maryshev, development director of the engineering company Energy Plus.
National projects that are still being implemented throughout the country and an active investment policy also help. state.
“The main investments are aimed at large-scale and long-term support of the IT industry, transport infrastructure, innovative technologies, regional production clusters,” lists Ekaterina Bezsmertnaya.
For example, 64 billion rubles were allocated from the federal budget for state development programs for the Far Eastern Federal District alone. New enterprises are opening, jobs are being created, the economist adds.
Europe in recession
Thus, despite the pessimistic forecasts of the West, the past year turned out to be successful for Russia. Unlike Europe, which has driven itself into the trap of its own sanctions. They officially recognized a large-scale recession: GDP will decline in ten EU countries at once. And this is not only Poland, Lithuania or Latvia, but also large economies.Thus, the generally recognized locomotive of the EU, Germany, fell into recession in the first quarter — minus 0.3 percent. In the second — minus 0.2 year-on-year. In the third there is also a reduction, since industry is not growing, and private consumption has little effect.
According to the Federal Statistical Office of Germany, German industry lost almost five percent year on year in November. Production has fallen for the sixth month in a row, and business sentiment has deteriorated to the level it was during the Covid pandemic.
According to a report published recently by S&P Global and the Hamburg Commercial Bank, the business activity index (PMI) in the manufacturing sector of Germany has continuously remained below the critical level of 50 points for the past year and a half. That is, the situation continues to worsen.
The main factors are the acceleration of energy prices against the backdrop of anti-Russian sanctions and the thoughtless allocation of budget funds to Ukraine. But that's not all.
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"The fight against inflation is carried out mainly through high rates, which inevitably suppress both demand and activity in the real sector of the economy. And current political processes are compressing sales markets,” adds Konstantin Zusmanovich, managing partner of the “Finance Mechanics” expert group.
In addition, the Europeans did not notice how they began to lose competition to Asian manufacturers. For example, if 15 years ago the German auto industry was an absolute authority, now others are also trusted, explains Pavel Maryshev.
The World Bank has lowered its forecast for economic growth in the eurozone in 2024 to 0.7%. The result for 2023 is only 0.4%.
And Russian GDP, even according to World Bank estimates, added 2.6%. For 2024, unfriendly states predict 1.3%.