Tatarstan’s industry demonstrates growth exceeding 4% with state defence orders

How much the republic's GRP will grow

By the results of 2024, the Tatarstan economy is unlikely to be able to show higher growth than in 2023, when GRP grew by 3.6%. In the context of increased sanctions, the dynamics of economic growth in the republic will be weaker, analysts predict. According to their estimates, the growth rate may be only 2.8-3.3%, while the national GDP is estimated at 3.9% this year, analysts at the Institute of National Economic Forecasting of the Russian Academy of Sciences (INP RAS) predict in their review.

However, these forecasts are still preliminary. The final results of 2024 will be known closer to February 2025, when Rosstat will publish official statistics on the socio-economic development of the country.

In the meantime, the forecasts are based on operational data on GRP indicators that have developed by December 2024. The expected GRP figure by the end of 2024 will amount to 5 trillion rubles against 4.32 trillion rubles last year, said Rustam Minnikhanov at a New Year's Eve meeting with the press. If we compare these data, the republic may end the year with a slight advantage in the regional product — in the amount of 680 billion rubles, experts estimate. In terms of comparable prices and taking into account the average annual inflation of 7.7-9%, the GRP increase will be more modest than last year.

November shake-up: how the industry turned toward growth

The reason for the contradictory estimates is most likely hidden in the belated revival of the industrial sector of the economy. Until September, enterprises operated in an inertial mode, neither rising above nor falling below the 101-102% index.

The reversal finally took shape in November after a long period of stagnation. The industry showed a 106% jump, reported Tatarstanstat on the last working day of the outgoing year. “The volume of industrial production in November 2024 increased by 6% compared to the same period in 2023," the ministry said in a statement.

The growth in the republic is provided by manufacturing industries, while the fuel and energy sector is pulling down. As follows from the report, in November there was a decline in oil production by 3.3%, while manufacturing increased output by 11%. Simultaneously with them, the energy sector (energy and heat production) increased by 10.3%. The sectors related to water supply and sewage, waste management, and pollution remediation showed a decline of 1.8%," according to a statement from Tatarstanstat.

Enterprises producing computers, electronic and optical products are among the growth leaders — plus 59.5%. In November, activity picked up in 13 manufacturing industries, including machinery production, oil refining, chemical production, and food processing. Eight industries, including the manufacture of medicines, are among the outsiders. A deep decline of 33.2% was recorded, according to the report.

Defence industry, like a good locomotive, needs to get warmed up to build momentum.

The November shake-up gives hope for a serious adjustment to the annual results. Thus, the industrial production index increased from 103.9% to 104.1% in 11 months, according to official data.

This breakthrough helped the industry surpass its own result last year, when the production index was 103.3%. By comparison, the Industrial Production Index (IPI) in the country is forecasted at 103.1%. But there are still December results ahead. Production is expected to remain in the growth zone. The question is how long?

He compared the slow production dynamics since the beginning of the year to a “steam locomotive” that needs to “be warmed up”. “Everything has its own inertia, but now we are rushing at full speed," he philosophically remarked in a conversation with Realnoe Vremya.

Mobilisation and civilian: how the economy has changed

Strictly speaking, the beginning of 2024 did not foreshadow such a rise. From the start, the industry “left” at a slow pace and moved at this pace for the first quarter. The industrial production index (IPI) was fixed at 101.9%.

After the failure in May, when the industry fell back to 98.5%, the recovery took quite a long time. Tatarstan showed the worst results in the Volga region. In three quarters, the index rose to 102.8%. Stagnation was observed throughout the summer season. In June, the IPI rose to 101.9%, in June it rolled back to 100.1%, and in August it rose to 102.5%.

The hope for an improvement in the economy emerged in September when the industry surged by 112.7%. And from that moment on, production entered the trajectory of steady growth. At the same time, in September, Tatarstan's Minister of Economy, Midkhat Shagiakhmetov, addressed the State Council with an adjustment to the forecast of socio-economic development for 2024. He announced a revision of GRP growth from 2.2% to 2.8%.

The minister announced for the first time that the GRP would exceed 5 trillion rubles, whereas at the beginning of the year it was planned to exceed 4.1 trillion rubles. The authors of the initial forecast missed the target by almost 1 trillion rubles. But this slight deviation will be taken in stride, as it's always better to leave yourself some leeway than to try to reach an unattainable benchmark.

Experts explain the discrepancy by the syndrome of a “bipolar” economy, when the “mobilisation” part of the economy (enterprises of the state defense order — GOZ) is growing, while the real sector, on the contrary, continues to experience difficulties with sales and is inferior. “In the second half of the year, the economy was divided into two sectors. The defence industry and the IT industry are moving at a high pace, and there is a squeeze in the real sector," says Radiy Salimov, Associate Professor of Economics and Management at KNRTU-KAI. According to him, the defence industry is now on the verge of reindustrialisation, that is, the construction of new plants.

Aviation Industry Ministry and third SEZ: what is expected in Tatarstan

According to the source, the creation of the Ministry of Aviation Industry, which should act as the customer and coordinator of production, is currently being discussed at the federal level. But what about airlines that are used to flying on foreign planes and are wary of domestic aircraft? So, Aeroflot refused contracts for the purchase of the Tu-214 and could not persuade them. One of the possible reasons for the refusal is the threat of delivery delays on the part of the company. How to “reconcile” producers and operators?

“New mechanisms are needed, which will be proposed by the newly created ministry. This is not a republican task, but a federal one," concluded Radiy Salimov.

The difficulty is that the high loan rate has a strong impact on such projects. “Defence industry enterprises are putting investment projects on pause. Those who wanted to develop technological lines and robotise put it off. POZIS, Elecon, KVZ, and Electropribor have refocused on fulfilling the state defence order. The civil issue has been forgotten," he concluded.