in May 2023, there was a local peak in the growth of output of basic industries in the Russian Federation


According to ACRA analysts, in May 2023, there was a local peak in the growth in the output of basic industries in the Russian Federation: in May it was 1.5% higher than in April (after seasonally adjusted), and the index value of 107.8% is already close to the December peak 2021. Pointing to the output of basic industries as “the closest proxy indicator of real GDP dynamics”, analysts fix: if the rest of 2023 business activity was comparable to May, the index growth for the year would be about 3.8%, which, taking into account services at “ An optimistic extrapolation of current trends corresponds to GDP growth of more than 3%.”

Taking into account the seasonality of the average monthly level of the fourth quarter of 2021, in May 2023, production, “water and garbage”, retail turnover, wholesale trade and cargo turnover did not reach (see chart). This is almost entirely due to the emergence of barriers to exports and imports and changes in logistics, according to the agency. The largest excess of pre-crisis output is observed in construction (13.4%) and paid services to the population (5.6%), oriented to domestic demand and stimulated by government spending, as well as in the agro-industrial complex (5.6%). Taking into account the weight of sectors, the largest contribution to GDP growth was made by construction, the equivalent of 1.6 percentage points of GDP.

However, like other economists (see Kommersant on July 6), ACRA notes that business activity in the second quarter will be lower due to lower oil production, budget spending and household consumption. In addition, analysts note that when interpreting trends, it is important to rely on monthly and quarterly increases in the seasonally adjusted production index, and not on annual ones. “The dynamics of annual growth half reflects not the trends of the current moment, but more ancient events, for example, last year,” they explain. For example, the apparent acceleration in the annual growth of wholesale trade from 6.5% in April 2023 to 14.8% in May is fully explained by the increase in the intensity of wholesale trade from January to February 2023, as well as the fact that for this segment May 2022 turned out to be much worse than April. In the second quarter, the sector’s turnover actually stagnated, and over the past two months it has slightly decreased. At the same time, for example, in manufacturing or construction, the increase in annual rates really correlates with the growth in the last two months.

Artem Chugunov

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