Decline in civilian sectors: armaments production slows down the Russian economy's collapse

The attack on Ukraine is also a debacle for Russia from an economic point of view.

Decline in civilian sectors: armaments production slows down the Russian economy's collapse

The attack on Ukraine is also a debacle for Russia from an economic point of view. Hundreds of thousands of men are at war or have fled, and the civilian economy is shrinking. The only thing that mainly supports the economy is now armaments production.

Russian industry has slowed its downturn because of increased armaments production in the wake of mobilization for the war against Ukraine. Their production shrank by only 2.6 percent in October compared to the same month last year, as reported by the statistical office. Economists had expected a 3.8 percent drop after September's 3.1 percent drop.

"Production in the manufacturing sector is now mainly supported by armaments production," said economist Yevgeny Suvorov from CentroCredi Bank. Other experts see it that way too. "The impact of mobilization and military spending is clearly visible in industrial production: it masks the decline in other civilian sectors," said Locko Invest analyst Dmitry Polevoy.

Textile production grew by 11.9 percent. Manufacturing of workwear - which includes military uniforms - grew 2.2 times. "This dynamic is most likely related to the fulfillment of military orders and the production of uniforms for the conscripts," said economist Olga Belenkaya from the financial services provider Finam.

Although details of military spending are not released, the Statistics Office recorded a noticeable increase in output in sectors covering arms and ammunition production in October, Polevoy said. The official data, which came out better than the polls, is a sign that military spending is offsetting the loss in civilian production.

Russia has drafted more than 300,000 reservists for the war against Ukraine, mostly men of working age. In addition, hundreds of thousands have fled the country for fear of conscription. Many companies are therefore complaining about labor shortages and increased economic insecurity, especially since numerous Western sanctions have been imposed and tightened since the beginning of the war.