Russian President Vladimir Putin, amid a sharp decline in the PMI business activity index, has prohibited the Russian manufacturing industry from falling, according to  a list of instructions published on the Kremlin portal.

It states that the level of production in this sector of the economy in 2025 should not decrease compared to 2024.

The government and the Central Bank have been instructed to pay special attention to “additional stimulation of demand for industrial products” and to support “investment activities.” According to the president’s instruction, the Cabinet of Ministers and the Central Bank must, as a matter of priority, ensure sufficient funding for state support for the “cluster investment platform and industrial mortgages.” Their area of responsibility also includes “the prompt implementation of mechanisms to support priority projects in industry,” the instruction says. The president expects the implementation of the designated measures by August.

In early July, surveys of Russian companies as part of an analysis of the PMI index, which reflects business activity in the manufacturing industries, showed a rapid deterioration in the situation. In June, the indicator fell from 50.2 to 47.5 points, ending up in the recession zone (below 50 points). 

This is the sharpest decline since March 2022, according to S&P Global, which analyzes data for the PMI. It was noted that business activity has slowed in three of the last four months. The index had already fallen below 50 points in April, but showed a slight plus in May. In June, new orders continued to decline, S&P Global calls the decline “sustainable.” According to the survey results, production fell for the fourth month in a row, with June recording the fastest pace since March.

Representatives of companies participating in the survey linked this to weak demand and a decrease in the purchasing power of customers.

In 2024, however, the manufacturing industry showed growth, driven by the production of goods for the needs of the war in Ukraine. According to Rosstat, last year the output of goods in this sector of the economy grew by 8.5%.

First Deputy Minister of Industry and Trade Vasily Osmakov reported in March that in 2024, production of radio electronics increased by 30%, pharmaceuticals by 18%, and the automotive industry by 16.5%. “In general, growth is linear. Last year, we only had a decline in metallurgy and construction materials,” he said at a meeting in the Federation Council.

According to him, in 2024, the volume of investments in the manufacturing industry increased by almost a quarter (22.4%) to 5.8 trillion rubles.

(C)THE MOSCOW TIMES 2025