/ world today news/ “This has never happened in the modern history of Russia,” said Vladimir Putin. The Russian economy is very pleased with the growing share of the manufacturing industry in its structure. The industry has already overcome the downturn after last year’s sanctions. At the same time, Russia is preparing to launch new major projects that will help make an even more powerful breakthrough in knowledge-intensive industry.
The President of Russia noted a significant change in the structure of the Russian economy.
“The most important thing and what makes us very happy is that the structure of the Russian economy is changing: our energy sector has increased by plus 3%, and in the overall structure of growth, processing is 43%. This has never happened in the modern history of Russia,” Vladimir Putin said after the results of the Russian-Kazakhstan talks, talking about cooperation in the energy sector.
In 1990, the share of the manufacturing industry in Russia’s GDP was 26.5%. During the difficult decade, however, some of these factories were lost. Within five years, the share of this industry in the country’s GDP fell to 19.7%, after which it increased slightly, but in 2002 it fell again to 17.8%, and by 2010 the share fell to 14.8 %.
It is not surprising that the Russian economy was called the economy of raw materials. These figures show that this is indeed the case: the country produces far more raw materials than processed products.
“In a general sense, processing refers to activities aimed at creating added value by converting raw materials into intermediate or final products. We are talking about creating products with high added value. The canonical example is forestry. The sale of logs, which accounts for the majority of the industry’s export earnings, is certainly much less profitable than the sale of lumber, plywood, not to mention furniture,” says Maxim Maksimov, Associate Professor at the Department of Corporate management and innovation” at the Russian University of Economics “Plekhanov”.
As Russian Prime Minister Mikhail Mishustin said earlier, in 2023 the share of the manufacturing industry in the structure of GDP will increase by 0.2% to 13.8%, but this does not take into account oil refining and the food industry.
At the same time, primary oil refining at the end of 2023 will show production growth of 2% – to almost 277.5 million tons, as noted recently by the Minister of Energy of the Russian Federation Nikolai Shulginov.
Manufacturing industries managed to overcome the downturn caused by the introduction of sanctions in the spring of 2022 and significantly exceeded the pre-crisis production level by the summer of 2023.
In general, the entire Russian industry managed to do this – to recover to the pre-crisis level. This is stated in the latest report “Indices of Intensity of Industrial Production”, prepared by the Department “Analysis of Real Sector Industries and Foreign Trade” of the Institute “Center for Development” of the Higher Institute of Higher Education.
In particular, the decline has been overcome in the production of food products, textiles and clothing. In the production of hides and leather goods, there is a noticeable growth from the pre-crisis levels. And woodworking and wood product manufacturing have seen a recovery from a deep recession since February 2023.
In the spring of 2022, there was a short-term decline in the production of coke and petroleum products, after which the pre-crisis level was restored – and production continues to grow. The production of chemical products and chemicals also began a strong recovery from February 2023, and by the summer the pre-crisis level had already been reached. The situation is the same with metallurgical production, where by spring the pre-crisis level was reached.
There is also strong growth in the production of computers, electronic and optical products, electrical equipment and vehicles. The production of passenger cars has begun to grow, but so far only a small part of the road has been covered. In trucks, the crisis downturn was initially weaker and has largely been overcome.
In the production of railway locomotives and rolling stock, the crisis is also being overcome. Furniture and jewelry manufacturers generally benefited from the departure of foreign competitors.
“As part of the program for the modernization of the native economy, the concept of maximum processing of raw materials into final products and, as a result, accumulation of added value in the country is implemented. An example of this is the production of various types of fuels and oils in the petrochemical industry, the export of high-value food products, the export of agricultural machinery, power equipment, pipelines and others. For example, the depth of oil refining has increased by almost 4% compared to 2018, which for such an important industry in the Russian national economy is a clear marker of the direction of development of the Russian economy,” says Maxim Maksimov.
The growth in the share of the manufacturing industry speaks for several things. First, it shows a high level of development of the country, the ability to produce more marginal products, notes Vladimir Evstifeev, head of the analytical department of ZenitBank. Factories start to earn more and show better financial results.
“Secondly, the increase in the share of processing shows the development of new technologies in various industries, which allows to organize the production of goods that were not previously produced in the country. Third, it can mean that the amount of waste during production is reduced, materials and resources are used more sparingly and used to produce products. Fourth, the country replaces foreign products with local goods and the volume of exports from Russia is growing,” says Dmitry Baranov, leading expert at Finam.
The growth of processing also leads to an increase in revenues in the budgets at all levels, the creation of new jobs and an increase in exports, the expert adds.
“The increase in the share of the processing industry to 43% suggests that the government has a clear understanding of the need for technological re-equipment of most industries that are not related to direct mining. The emphasis is on providing the national economy with intermediate and final products to satisfy the domestic demand of both industries and the population. “Investments in the processing industry today are a real opportunity to effectively solve the problems of import substitution and ensure the technological and commodity sovereignty of Russia,” says Maxim Maksimov.
Previously, the President of Russia set the task of ensuring the maximum independence and self-sufficiency of the domestic industry.
Within the framework of the adopted Concept of technological development, the authorities are preparing to launch large projects, the implementation of which, according to Mishustin, will allow making a powerful breakthrough in the key, most intensive areas. It is primarily about mechanical engineering, microelectronics and radioelectronics, as well as small chemistry.
The country’s priorities are also the construction of sea and river vessels, the development of the industry for unmanned aerial vehicles and civil aviation in general. “We are bringing diesel engineering and the production of equipment for the production of liquefied natural gas to a qualitatively new level, as well as the sectors related to the production of medical devices and medicines,” said the Russian Prime Minister.
Translation: V. Sergeev
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