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Throughout the three-plus years of the war, the Russian military-industrial complex grew at double-digit rates, but in September the trend reversed.
After three years of production boom, growth in Russia’s military-industrial complex has stalled and begun to decline, The Moscow Times reports, citing recent data from Rosstat. “The military-industrial complex, which had become the main driver of the Russian economy thanks to trillions in budget spending on state defense orders, suddenly collapsed. For the first time since the war, industries linked to the military-industrial complex have stagnated or contracted, following double-digit growth rates for almost three years in a row,” the publication writes.
Thus, the latest data for September show that production volumes of “finished metal products,” which includes most weapons, fell by 1.6% compared to September of last year. By comparison, this category saw a 26.4% increase in 2023 and a 31.6% increase in 2024.
In the “other vehicles” category, which Rosstat classifies all military equipment, from infantry fighting vehicles to submarines, growth in September was 6% compared to the same month the previous year. By comparison, this category grew by 34.2% in 2024 and by 29% in 2023.
If we compare production in September with August of this year, we see a dramatic decline – 6% and 20% in both categories, respectively.
Analysts are calling the latest data on the Russian military industry “shocking.” Alfa Bank Chief Economist Natalia Orlova believes the decline in production is the result of the Russian budget running out of funds. All this also negatively affects the supply of ammunition to the Russian army at the front.
Recall, as Russian President Vladimir Putin’s “special military operation” against Ukraine approaches its third year, its casualties increasingly include Russian arms exports, traditionally the economy’s second largest export earner after energy. By the end of 2024, Russian arms exports decreased fourteenfold from their levels in 2021 by 92 percent to less than $1 billion. In 2021, before the full-scale invasion began, Russian arms exports generated $14.6 billion; in 2022, $8 billion; and in 2023, $3 billion. The most significant factor behind the reduction in exports is the redistribution of resources for domestic needs, as Russia’s military-industrial complex’s top priority is now equipping its own armed forces during its military conflict with Ukraine.
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