Russia's industrial activity falls to lowest level since 2022, Reuters reports
Russia's manufacturing sector recorded its weakest performance in over two years in July, Reuters reported on Aug. 1, citing a business survey.
Despite heavy militarization and a surge in state defense orders since the start of the war against Ukraine, Russia's industrial production growth has begun to slow.
The Russian Central Bank has attempted to stimulate the economy by cutting the key interest rate to 18%, but borrowing costs remain at record highs.
Russia's manufacturing sector continued to contract in July, with the S&P Global Purchasing Managers' Index (PMI) dropping to 47.0 from 47.5 in June, its second straight monthly decline. A PMI reading below 50 indicates a downturn in activity, Reuters reported.
According to surveyed firms, weakening demand, rising financial pressure on clients, and increasing payment delays contributed to the slump. As a result, both production volumes and new orders fell over the month.
Companies report a sharp deterioration in conditions, citing falling demand, rising financial difficulties among customers, and increasing payment delays. Consequently, both production volumes and new orders have declined.
New orders have seen a particularly steep drop — the largest since March 2022. While export orders have edged up slightly, overall business confidence has sunk to its lowest point in nearly three years.
"Although companies hope that investment in new products and facilities will support output growth, economic uncertainty and reduced purchasing power at customers dampened positive sentiment," S&P Global said.
Earlier, the International Monetary Fund (IMF) said Russia's economy is set to sharply decelerate, returning to stagnation after two years of war-driven expansion.
The IMF cut its 2025 projections for Russia to 0.9%, more than four times lower than the 4.3% expansion recorded in 2024. Growth is projected to remain sluggish at 1% in 2026.
Economist Andrei Movchan, founder of Movchan's Group, told the Kyiv Independent earlier this year that the Kremlin's heavy military outlays are choking broader economic performance.
