MOSCOW, August 7, Natalia Dembinskaya. In the list of industrially developed economies, Britain dropped from eighth to 12th place and gave way to top 10 Russia. Why this happened — in the material .
Knocked out of the top ten
According to the analysis of the British association of manufacturing sectors Make UK, Russia and Mexico have pulled ahead. As the Times specifies, these countries took eighth and seventh places, respectively. China and the United States retained their leadership.
Experts attribute London's failure to the «reshaping of the contours» of the global economy and the lack of a «long-term industrial strategy» in contrast to other major countries such as Germany, China and the United States.
The UK is the only one of the world's most industrially developed countries that does not have a plan for its manufacturing sectors, analysts have noted.
And there are no grounds for a positive forecast, including «advanced» manufacturing industries, experts from the University of Sheffield point out.
«The decline in manufacturing jobs has been reversed over the past five years, but this may simply be a short-term 'bounce back' from the catastrophic decline of the previous decade, exacerbated by the 2008 economic crisis. Moreover, we appear to be witnessing a new phenomenon: the UK is creating low-skilled jobs without increasing manufacturing capacity,» the study's authors write.
Political Miscalculations
According to university analysts, leaving the EU will continue to put pressure on the country's real sector in the coming years. Trade barriers with key European partners and a reduction in investment are possible.
«The exclusion from the rating is due, on the one hand, to the growth of industry in competing countries, and on the other hand, to problems with our own industry. Among them is the severance of economic ties with Russia, in particular the refusal to use oil and natural gas. Such political miscalculations could not but have an impact,» says Leonid Khazanov, an independent industrial expert.
The pace has doubled
Russia has been demonstrating positive dynamics since March 2023.
Activity in real sector rose to record levels in 2017. And the rate of increase in employment is the highest since 2000.
The main contribution was made by the manufacturing industry – plus 7.5 percent. The overall figure for 2023 is 3.5 percent.
In the first half of 2024, according to Rosstat, the industry added another 4.4 percent (in 2023 it was 2.1).
Make UK analysts linked this leap to «unprecedented growth in the defense industry, which accounts for more than six percent of the country's GDP.»
However, in addition to state defense orders, import substitution and localization of production played an important role.
Not only the military-industrial complex
The leaders are mainly medium- and high-tech enterprises. In particular, the production of computers, electronic and optical products. The disruption of supplies from abroad stimulated the modernization of the production and technological base and ensured maximum capacity utilization. Promising niches opened up for domestic goods.
In April, the HSE ISSEK Center for Market Research published the results of a survey on the progress of import substitution in industry. It turned out that in 2023, compared to 2022, the process accelerated for 36 percent of enterprises.
In 2024, according to the forecasts of production managers, this will continue for 47 percent of companies producing electrical equipment, 44 percent of motor vehicles and trailers, 40 percent of other finished products. In the pharmaceutical sector there are 47 percent of such enterprises, petrochemicals — 42, the figure for mining in general is 42 percent, oil and gas — 30.
As the HSE emphasized, judging by the assessments of the demand for import substitution, enterprises are “deeply involved in the process.” Almost 30 percent note low dependence on imports.
«Phase of a new recovery»
In the first half of the year, the manufacturing industry also made the main positive contribution: plus eight percent. The leaders in growth were the production of finished metal products (except for machinery and equipment, 36.1 percent), the production of computers, electronic and optical products (35), motor vehicles, trailers and semi-trailers (27.4).
A special item is passenger cars. If in 2022, against the backdrop of the departure of Western brands, there was a 2.5-fold drop, then in 2023 there was an increase of almost 20 percent. And now it is 62.2.
Records are also in the field of radar equipment and remote control equipment — 65.7 percent, navigation instruments — 45.2. Assembly of diesel locomotives — 45.7, mainline freight cars — 40.4 percent. And even beet sugar has 41.7.
As experts from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMACF) pointed out, the country has been experiencing a “new recovery phase” since February. They explained about two-thirds of the increase by market factors — the immediate completion of large orders in the field of metal products and the restoration of the production of petroleum products.
For example, in March there were the best results in almost 18 years. The global S&P Purchasing Managers' Index (PMI) reached 55.7 — the highest since August 2006. More than 50 means growth, less — decline.
Capacity Utilization
Capacity utilization at plants rose to 80.9 percent in the second quarter, the Bank of Russia reported in the July issue of «Enterprise Monitoring.» The data is based on regularly conducted (since 2000) surveys in the non-financial sector. The sample includes 14.5 thousand enterprises.
«This is a new historical maximum,» the Central Bank emphasizes. In the first quarter it was 80.3.
In particular, in the extraction of minerals — 82.6 percent, in the manufacturing sector — 75.6, in construction — 77.7.
The Bank of Russia indicates that enterprises «modernized production in the context of a reorientation to domestic demand, the activation of import substitution programs.»
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All this was accompanied by increased investment activity. According to estimates, this is the maximum since 2009, the regulator notes. Now the balance of responses is about nine points; two years ago it was in the negative zone, at minus four, and in the middle of the Covid 2020 — minus eight.
Went beyond the pale
Western analysts admit: the Russian economy is growing, and this has long gone beyond the «defense» rise.
The country has seen higher-than-expected oil and gas revenues: sanctions on fuel prices have largely failed. Last year, the federal budget was replenished by 8.82 trillion rubles due to this sector — 822 billion less was expected.
Due to Western sanctions, companies are investing heavily in re-equipping production lines.
In the first quarter, according to Rosstat, investments in fixed assets increased by 14.5 percent year-on-year — to 5.93 trillion rubles ($66.2 billion).