Russia has created fertile ground for local industries to flourish by fostering collaborations between domestic enterprises and foreign investors. Earlier this month S&P Global Manufacturing noted Russia’s manufacturing sector grew to Purchasing Managers Index (PMI) 53.1 in January 2025, from 50.8 in December 2024. This is the fourth consecutive month of growth in the sector, marking a solid improvement in the health of the manufacturing sector. Russian Prime Minister Mihhail Mishustin pointed out that the manufacturing sector grew by 8%, alongside a 4% GDP growth by the end of 2024, surpassing earlier projections of 6% and 3% respectively.
The growth is primarily driven by domestic demands, as new orders flood in causing a ripple effect in employment, which is now noting its first expansion after 2 months of contraction and the fastest since June 2024. The defence sector has been a pivotal driver in this growth. Government spending on defence manufacturing has catalysed industrial production, spurring growth in allied industries like aerospace and energy equipment. These investments have not only fortified Russia’s strategic capabilities but also bolstered the broader economy in the wake of sanctions. Companies reported modest progress in creating input safety reserves despite ongoing supply chain problems, which helped to fuel the first increase in purchase stocks since November 2023.
Russia's manufacturing revival can also be attributed to its foray into high-value and innovative industries. The country is making strides in electric vehicle (EV) manufacturing, leveraging its abundant reserves of nickel and cobalt, key components in EV batteries. Companies such as AvtoVAZ and GAZ are scaling up production, catering to both domestic and regional markets. These initiatives are not only diversifying Russia’s manufacturing base but are also paving the way for long-term economic sustainability in a rapidly electrifying global market. According to new reports the government plans to invest up to $900 million in the next three years into the development of a national car platform.
Similarly, Russia’s aerospace ambitions underscore its manufacturing renaissance. Projects like the Irkut MC-21 and Sukhoi Superjet 100 aim to reduce dependency on Western aircraft while establishing Russia as a competitive force in global aviation. These endeavors reflect a broader strategy to achieve technological self-reliance while tapping into lucrative export markets.
This resurgence has implications that extend beyond Russia’s borders. Increased export demand for Russian-made goods signal the country’s growing competitiveness in global markets. This is a testament to the manufacturing sector's ability to adapt and innovate despite external pressures. The manufacturing sector is not only bolstering Russia’s overall economic growth, which stands at 4%, but is providing a stable platform for future investments.
The revival of Russia’s manufacturing sector is a testament to its resilience and strategic vision. By embracing innovation, fostering self-reliance, and diversifying its industrial base, Russia has turned its manufacturing industry into a beacon of economic hope. If this trajectory continues, the sector has the potential to not only strengthen Russia’s domestic economy but also enhance its influence in global markets. Investors, policymakers, and industry leaders would do well to take note of this remarkable transformation.
*By Dr Iqbal Survé
Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN
*By Chloe Maluleke: Associate at The BRICS+ Consulting Group
Russian & Middle Eastern Specialist
**The Views expressed do not necessarily reflect the views of Independent Media or IOL