Rapid growth Russian industry, powered by government contracts for the military-industrial complexIt's exhausting. February statistic show a crude picture: according to Rosstat, production has barely moved, expanding by just 0.2% compared to February 2024 and 0.4% compared to January 2025 (even with less days and seasonal effects).
This is simply a dramatic slowdown compared to the January growth of 2.2% (year-to-year) and far from the crucial 5.9% recorded in the last 4th of 2023. To put it simply, Russian economical growth has declined dramatically over the last year.
Moreover, even the tiny increase observed in February was based only on 2 things. Firstly, the typical February frost across Russia increased heat and energy production, as noted by the Centre for Macroeconomic Analysis and Short-term Forecasts (CMASF). Secondly, growth continued in sectors dominated by defence contractors. Economists estimation that if not for these factors, industrial production would decrease by 0.4-0.5 percent in February compared to January. In another words, the increased production of finished metallic products (often defence-related) can no longer mask the decline in the production of everyday goods specified as yogurts and shoes.
Industry has been stagnant for months and civilian sectors have been showing weakness since mid-2023. The key question now is: will stagnation turn into a prolonged breakdown, and if so, where will it hit most?
Perspectives for consumer goods and respective key non-military industries look like dark. Clothing and footwear factories, erstwhile typed as the leaders of import substitution after the departure of western brands, recorded a decrease in production of 0.5% in February and 1.8% in the first 2 months of the year. Food production declined by 3 percent, while beverage production by stunning 11.3 percent.
At the same time, mandatory cuts in OPEC production and halting exports of gas by Ukraine led to almost 5% drop in mining compared to the erstwhile year.
Black clouds over Russian motorization
Motor vehicle industry, the cornerstone of the civilian economyHe's preparing to slow down. Russian car production was devastated in 2022 after Full scale invasion caused mass exodus of abroad companies. Production decreased by almost 70%, and this year only 450 1000 passenger cars were manufactured.
While the establishment of supply chains of essential components allowed for a partial recovery (an increase of 19% in 2023 and a strong increase in early 2024), the image again darkens. In the first 2 months of 2025, passenger car production increased by 13 percent, but truck production decreased by 20 percent and buses by 42 percent. Vehicle production showed a decline in early 2025 — -8.3 percent in January and then -7.5 percent in February.
Further string of article under video material
Production follows request and sales face difficulties. The marketplace appeared to be resurgent in 2024, reaching 1,57 million cars sold — an increase of 48% compared to the lowest level of 2022. At the time, expanding gross and growth in car credit — driven by subsidies and peculiar schemes despite advanced key interest rates — created temporary impulse. However, CMASF analysts note that the decrease actually started at the end of 2024.
The consulting company Oks Labs presents gloomy forecasts for 2025: sales of fresh cars are expected to fall by 11% in the baseline script (to 1.39 million units) and by 22 percent in a more pessimistic case (to 1.23 million). Even the most optimistic forecast predicts a decrease of 1% (to 1.55 million vehicles).
Sales in the first 4th have already decreased by 25 percent, according to AwtoWAZ data – maker Dealswhose sales decreased by 17 percent. The CEO of Maksim Sokolov defined the March marketplace decline as ‘dramatic’, confirming the expectations of a crucial marketplace contraction throughout the year.
Reasons for a breakdown
The reasons for this slowdown are systemic. Overstock, which means overcrowded dealerships, which contain around 700 1000 unsold cars. The rising prices caused by the expected increase in the user charge make cars increasingly out of reach. Higher policy interest rates central bank proceed to dampen demand, making loans and leasing besides expensive.
According to CMASF economists in March, consumer spending fell in January, possibly signalling "direct hazard of marketplace contraction due to the consumer credit crisis". It is worth noting that this decrease was mostly due to the decrease in car sales.
Moreover, Russian car manufacturers are struggling with strong competition from Chinese brandswhich do not know whether to invest in local production, preferring to avoid risks while expanding imports. The falling volume of freight is damaging the request for dense goods vehicles, and the reported quality problems of any models produced in China further complicate the case.
Commercial vehicle manufacturers study sales declines of 70% on average, and warehouses full of unsold stocks stand idle due to reduced request for transport.
Domino effect
The decline in the automotive manufacture has a domino effect, entailing the collapse of related sectors, from component suppliers to service centres. The shrinking marketplace inevitably hits dealers (some in Moscow are already preparing to close) and threatens the existence of manufacture workers by cutting wages or losing jobs.
The signs of the crisis are spreading to another areas of civilian engineering. Production of electrical equipment decreased by 2.6% in February (after a decrease of 9.1% in January) and production of device tools by 9.2% (after a decrease of 2.3% in January). The Rollingstock Agency (RSA) foresees a 25% decrease in freight wagon production in 2025, to 55.4,000 units. This downward trend began at the end of 2024 and analysts believe that the sector could shrink by 3-5 percent, mainly due to the fact that advanced interest rates killed request for car leasing.
Russian president Vladimir Putin in 1 of the factories, March 2023.Vladimir Gerdo / AFP
Machine manufacturers agricultural They face the same adversity. Deliveries are falling and 2025 could be the worst year of sales since 2022. The combination of advanced central bank interest rates, low farm profits, insufficient government support and rapidly rising production costs chokes investment in fresh equipment — manufacturers, farmers and manufacture experts agree unanimously.
There are besides widespread concerns that higher usage fees will make imported machinery even more expensive, which will further reduce request in the agricultural sector. Sales are expected to fall by 10-15 percent this year, and Rosspecmasz does not see any signs of improvement. For tractor dealers and harvesters, the year 2025 promises to be the most hard year in a decade.
Construction problems
Production of construction equipment may besides fall. As infrastructure projects are halted, the request for road construction machinery is reduced, explains Alla Elizarov, manager of Rosspecmasz.
The construction sector has long been driving the Russian economy by expanding macroeconomic indicators, attracting investment and creating jobs both straight and indirectly. However, he besides faces an adverse economical environment. With increase in mortgage interest rates in 2024 and the regulation of popular subsidised credit schemes a large proportion of possible home buyers simply cannot afford to buy an flat anymore. This inevitably slowed down fresh construction and consequently reduced request for construction materials, the trend already felt by manufacturers.
Experts foretell a 3-5 percent decrease in construction materials production in 2025. If interest rates stay high, developers can reduce the number of projects started by drastic 30-35 percent. This would lead to a sharp decline in the number of completed residential buildings by 2027, and material producers would have felt pain as early as 2026, says Alexey Zimin of Knauf Gips.
Dark year for steel producers
This year will be peculiarly hard for the sector metallurgy Iron, which is mostly based on the construction manufacture — its biggest customer, even surpassing the defence industry's request for steel. The slowdown in housing growth has already weakened request and reduced steel production in 2024.
The external factors are besides affected. Russian steel production is well above national needs, which makes exports crucial. After the EU, a key market, banned imports of Russian steel products in 2022, the companies tried to find fresh buyers, but the effort to reorient did not compensate for the full lost share of the European market. Moreover, request from Asian economies, the fresh export target, has besides weakened. Result: in 2024 Russian steel exports fell by 8 percent and production by 7 percent.
In the first 2 months of 2025 the steelworks produced little than a year ago. manufacture experts specify the situation as tense. 1 of the tactics of masking the problem is planning longer maintenance downtimes in the hope of improving marketplace conditions. However, fewer experts anticipate a fast recovery. Although large scale plants are not expected to be closed, advanced debt companies, specified as the Chelabinian Metallurgy Complex, are most vulnerable, although they are likely to find ways to adapt, suggests economist Natalia Zubarewicz.
Industry is uneven
The stagnation of Russian manufacture is no longer just an abstract macroeconomic issue. Although this decline goes beyond these sectors, these areas form the core non-military production — an crucial contribution to GDP growth, jobs and innovation.
For example, mechanical engineering acts as a catalyst for another sectors — including transport, energy and agriculture. Her condition is simply a barometer of the overall resilience of the economy.
Russian engineering has only faced major declines twice in the last decade — in 2015 and 2022, and both cases were mostly linked to geopolitical tensions and the exit of western companies. Each time the sector reflected comparatively quickly.
After the exodus of the corp reduced production by 5.9 percent in 2022, production increased by 25 percent in 2023 and another 19.5% in early 2024 (estimation of the Ministry of economical Development). This nearly 50% increase over 2 years full offset the losses of 2022.
However, this recovery was uneven and mostly distorted by the "budget momentum" — preferential treatment of defence service providers. taxation relief, subsidies and direct orders allowed the military-industrial complex to increase production despite adversities, specified as advanced interest rates and labour shortages. statistic show crucial increases in finished metallic products (an increase of 22.5 percent year-on-year) and another transport equipment (an increase of 33.6%) — clear indicators of "all on the front, all on the victory".
But even resources defence industry They're not unlimited. Production levels and growth rates are already tensed, and given production capacity and persistent labour shortages, The possible for further expansion seems uncertain at best.
![The Russians attacked the Polish company. "A deliberate attack from 3 sides" [PHOTOS]](https://media.wplm.pl/thumbs/afb/NzIweDQ0Mi9jX2MvdV8xL2NjXzkwZjhhL3AvMjAyNS8wNy8xNi8xMjgwLzg1My9kM2UzYTMwMTNiZjk0ODBlYmQ1YmQxOGJjMWE2MWMyYS5qcGVn.jpeg)
