‘A wake up call’: industrial production dynamics in Tatarstan declining again
Industrial production in the republic fell by 2.1% in May compared to the same month last year
Russia's industry is showing record growth rates — according to Rosstat, production growth in the country accelerated to 5.3%. Against this background, the results of Tatarstan look very modest — in annual terms, the growth of industrial production in the republic amounted to 1%, and in May the production decreased by 2.1% compared to the same month last year. The reasons for the decline in the dynamics of industrial production were investigated by the analytical service of Realnoe Vremya.
Tatarstan's industrial production fell in May
Since May 2024, the dynamics of industrial production in Tatarstan has begun to slow down again — the industrial production index fell to 97.9% in May. At the beginning of 2024, the dynamics of industrial production grew — in February, the industrial production index in the republic was 100.5%, in March — 103.1%, in April — 103.7%.
In the five months of 2024, industrial production in Tatarstan increased by 1%. Goods worth 2.14 trillion rubles were shipped in the region, 1.5 trillion of them — in manufacturing, 512 billion rubles — in the field of mining.
At the same time, the growth of industrial production in Russia accelerated to 5.3% in May. These data were generally better than economists' expectations. Excluding seasonal and calendar factors in May 2024, according to Rosstat, the Russian industry increased by 2.0% after a decrease of 0.1% in April, an increase of 0.1% in March, an increase of 1.6% in February and a decrease of 0.2% in January. In May, growth in manufacturing accelerated to 9.1% year-on-year from 8.3% in April (January-May — an increase of 8.8%). In the extractive sector, production decreased by 0.3% in May after falling by 1.7% in April (an increase of 0.2% in January-May).
The Ministry of Economic Development of Russia predicts the growth of Russian industry in 2024 at the level of 2.5%. At the same time, the agency expects growth in manufacturing industries at the level of 4%.
Mining and motor transport — what is declining in Tatarstan?
In 2024, mining decreased in Tatarstan — the industrial production index in this area amounted to 96.9%. There was also a decrease in the production of clothing, motor vehicles, furniture and textiles.
Top 5 industries of Tatarstan, which demonstrated a decline
Sector | Industrial production index | |
1 | Clothing manufacturing | 85.2% |
2 | Production of motor vehicles, trailers, semi-trailers | 85.8% |
3 | Mining | 96.9% |
4 | Furniture manufacturing | 97.1% |
5 | Manufacture of textiles | 97.8% |
According to Tatarstan Statistics
Medicines, electrical equipment and computers — what is growing in Tatarstan?
At the same time, the production of other vehicles and equipment in the republic increased by 234.6%, medicines and materials — by 66.4%, the production of electrical equipment — by 22.1%, the production of computers, electronic and optical products — by 16.8%. Wood processing (+8.6%), production of rubber and plastic products (+6.9%), food production (+5.8%), as well as the production of finished metal products, paper and metallurgical production showed positive dynamics.
Top 10 fastest growing industries in Tatarstan
Sector | Industrial production index | |
1 | Manufacture of other vehicles and equipment | 334.6% |
2 | Production of medicines and materials used for medical purposes | 166.4% |
3 | Production of electrical equipment | 122.1% |
4 | Production of computers, electronic and optical products | 116.8% |
5 | Wood processing and production of wood and cork products, except furniture, manufacture of straw products and materials for weaving | 108.6% |
6 | Production of rubber and plastic products | 106.9% |
7 | Food production | 105.8% |
8 | Production of finished metal products, except machinery and equipment | 103.4% |
9 | Production of paper and paper products | 103.3% |
10 | Metallurgical production | 103.2% |
According to Tatarstan Statistics
It is worth noting that last summer, a similar pattern was observed in the industry — the growth rate began to slow down. In general, the indicators in the industry at the end of the year turned out to be weaker than in 2022.
“In 2022, the industry of the republic showed stronger results than in Russia as a whole, in 2023 it received a worse result than the nationwide. This may indicate that our republican industry increased its pace faster after the start of the military operation and the lifting of covid-19 restrictions, gave a good leap last year, and naturally, against the background of that it was already quite loaded with orders, it was much more difficult for it to grow further," explains Igor Koch, Doctor of Economics, Professor of the Kazan Federal University.
Growth of 103.2% for manufacturing is a moderate and positive indicator, indicating stable growth in the sector, which is especially important against the background of a general slowdown in industrial production in the region, he adds.
“Today, regions that are in the early stages of industrial development can indeed show higher growth rates," Kabakov agrees.
According to him, sanctions can also have an impact on the economy of Tatarstan, especially if they affect the oil and processing industries. “Restrictions on the export of technology, equipment and financing can slow down the development of these sectors and reduce investment," the expert concludes.
One who leads from behind in Volga Region
This year, Russia introduced an additional voluntary reduction to the previously existing one, as a result of which oil production continued to decline, he recalled.
Indicators in the manufacturing industry of Tatarstan also look quite modest compared to the national dynamics — in the whole country, the industrial production index for the five months of 2024 amounted to 108.8%. By the index of manufacturing industries (103.2%), the republic is the 66th among the regions of Russia and the last among the subjects of the Volga Federal District.
“Relative to most regions of Russia, the level of industrial production development in Tatarstan is indeed at a high level, but this level is not any limit for further development," Bukharsky emphasises. “This is especially true for processing industries, including oil refining, since there are necessary raw materials on the territory of the republic, as well as prospects for developing the domestic market against the background of export restrictions of primary raw materials.”
Sanctions pressure introduces certain difficulties, but it is also typical for other large oil-producing regions. Today, such regions need to reorient themselves to new markets for oil and petroleum products against the background of the embargo of the EU countries.
“A rethink of industrial policy is required”
In the structure of the GRP of Tatarstan, the share of mining is 27-28%, the share of manufacturing industries is about 18%. “Therefore, the growth rate of the extractive industry is much more significant for the economy of the republic," Shayakhmetov notes.
“The drop in the growth rate of the republican economy is a wake-up call. We need to rethink industrial policy and search for new development tools. We cannot rest on our laurels, it is necessary to act with new methods," the expert recommends. “At this stage, the current situation is not critical, but if the trend continues, Tatarstan will lose its existing leadership positions.”