Growth, but not the right one: experts have found out why the industry has revived in the country

Ivan Zubov

Russian industry has suddenly shown impressive growth here, Russian media say.

The business activity index (PMI) was at a six-year high: by the end of February 2023, the PMI in the industrial sector of the Russian economy was 53.6 points, while in January it was 52.6, these are the results of a study by analysts at S&P Global. Recall that if this indicator exceeds 50 points, it means an increase in economic activity in a particular sector, if it falls below this mark, then a recession. The company's experts specify that the February data in the industrial sector are due to the expansion of production capacities of local companies and new sales in the domestic market.

Moreover, the index is calculated quite interestingly: experts call managers of several hundred industrial companies and ask how the volume of orders, output, hiring, delivery speed and inventory level have changed. They are not asked to name specific figures, but only record the dynamics — more or less.

Judging by these data, it turns out that there are more orders and production in Russia. However, does this mean that sanctions were suddenly circumvented, and import substitution and parallel imports started working?

Alas. The experts of the Kremlin Mamkoved channel found out by a number of indirect signs that the defense industry gave an impetus to the rise of the domestic industry. For example, clothes began to be produced by 12% more, while about 80% of all clothes sewn in Russia are overalls and uniforms.

"The 4.7% increase in the output of finished metal products also hints at a lot. So economic growth does not come from business activity, but from the development of defense budgets ...", - experts conclude.