The food production industry continued to experience positive growth in January, as indicated by CMASF, with an increase of 10% compared to the previous month after a growth of 1.5% in December. According to CMASF, this year-on-year growth of 4.4% has surpassed the level of recovery. This means that food production has now surpassed production rates from a year ago. The decline in consumption, as observed in retail trade dynamics, can be attributed to partial import substitution, where there has been a reduction in demand for domestic food products. While the increase in domestic food production may have positive effects on economic statistics, it may not always benefit consumers (see the Re: Russia economic report ‘Worse than the crisis’ for further information). In situations where there is a lack of high-quality products, either imported or produced with imported equipment, consumers may be compelled to purchase lower-quality alternatives, which may further fuel the growth of domestic food production.
Furthermore, CMASF reports ongoing growth in several industrial sectors, including electrical equipment production (+4.3% in January following December's +7.8%), the automotive industry (+6.2% following a robust 21.8% increase), and building material production (+2.1% by December). In contrast, production of oil and gas remained at levels recorded in December, but coal production declined by 5.1% in January after a 2.0% increase in December. Additionally, there was a drop in output in metallurgy, chemical products, machinery, and equipment (–9.7% compared to December).
HSE experts have pointed out a noticeable decline in the range of industries that have increased their output compared to the previous month. In December, 24 out of 39 types of economic activity experienced an increase in the intensity of their output, whereas in January, only 13 sectors saw a growth in production. The pharmaceutical industry (+29.3% after half a year of continuous decline), housing and communal services enterprises (+1.4%), mining, not included in other groups (+11%), as well as repair and installation of machinery and equipment (+5.5%) accounted for more than 60% of this increase in output intensity.
Approximately 60% of the gross reduction in intensity was accounted for by the production of crude oil (–0.8%), the production of finished metal products (–7.3% after four months of steady growth), the production of vehicles (–11.7%), coal mining (–5.6% after three months of growth) and metallurgical production (–1.9%).
January’s data substantiates the assessment made by HSE experts last year regarding the state of the Russian economy., They distinguished an L-shaped crisis scenario, in which a sharp decline is observed with no subsequent period of recovery. The maximum decline in output was observed in April 2022, when production stood at just 94% of December 2021’s values (or the pre-war peak). By June, however, this figure had improved to 96.5% and continued to fluctuate around this level.
The ‘Bessonov index’, which measures the output levels of products and services, is an economic indicator that closely reflects the level of GDP. It is quicker to calculate and easily accessible, with a detailed analysis across all key types of economic activity. It is calculated using Rosstat’s data on the volume of output, but excludes seasonal components and some minor random fluctuations.