Useful indicator

Despite the development of energy-saving technologies, the volume of productive supply, and consequently, consumption of electricity is growing every year, fueling an increasing volume of production in the course of economic growth. This indicator falls during crisis periods characterized by a decline in production.

Table 1. A decrease in productive electricity supply in 2022 was observed mainly in regions with high external dependence⁴

^{4 Hereinafter, this implies the dependence of an economy on the countries that imposed trade restrictions on Russia, which existed until 2022.
5} Share of manufacturing industries in GRP is at least 20%.

At the same time, a number of regions whose economies are also focused on manufacturing did not record declines in 2022, which may indicate their lower external dependence and faster transformation of production processes. In addition, the absence of a decline may be due to the presence of larger supplies of raw materials and components held by companies in these regions. However, this thesis can only be proven by analyzing the dynamics of production indicators in a region over a longer period. The leaders of this group are listed in Table 2.

Table 2. Regions with moderate external dependence maintained positive dynamics of electricity supply

Sources: Rosstat, data of sales companies, ACRA

The decline in production in the extractive industry was the result of a reduction in oil production by the OPEC+ countries and the refusal of a number of foreign trading partners to import Russian minerals. The degree of dependence of the specified factors on a region depended on restrictions imposed on the main minerals mined within it, as well as on the location of key sales markets. Oil producing regions that prior to 2022 were focused on supplying China (for example, the Irkutsk Region) did not record a decline in the volume of productive supply, while regions such as the Nenets Autonomous Okrug, whose markets prior to 2022 were primarily western countries, experienced a decline in the volume of productive electricity supply of around 9%. The Kemerovo, Belgorod and Magadan Regions, which focus on extracting minerals that are not impacted by OPEC+ limitations (coal, ferrous metals), but whose main trade partners were countries that partly or completely reduced their purchases of Russian minerals, also recorded a decline in productive supply. However, as of the end of last year, the decline in indicators in extractive regions on average was not as significant (4%) as in regions with a high share of manufacturing.

Table 3. A decrease in electricity supply was observed in extractive regions with high dependence

Sources: Rosstat, data of sales companies, ACRA

At the beginning of the current year, regions also demonstrated diverse dynamics in terms of productive electricity supply. Thus, in a number of regions, signs of adaptation to the current situation have already been observed. For regions in which transformation processes are taking place more actively, one can consider the current conditions as a point of growth and an opportunity to successfully take part in import substitution. Below are the regions with a share of industry in GRP of more than 20%, which managed to record an increase in use electricity supply in the first quarter of this year after a decline in 2022.

Figure 2. In Q1 2023, regions with moderately high speed of adaptation demonstrated growth after the decline in 2022 (productive electricity supply index in the Other Consumers category, %)

Sources: Rosstat, data of sales companies, ACRA

Fig. 3 shows that five regions, which maintained positive dynamics in 2022, accelerated the growth of productive electricity supply. This makes it possible to claim that they have successfully adapted to the new conditions and refute the hypothesis that continued growth in productive electricity supply last year was due to the presence of significant reserves of raw materials and supplies.

Figure 3. In Q1 2023, the regions with the highest rate of adaptation accelerated growth (productive electricity supply index in the Other Consumers category, %)

Sources: data of sales companies, ACRA

However, a number of regions recorded negative dynamics.

Table 4. A decrease in productive electricity supply in Q1 2023 was observed to varying degrees mainly in regions with a moderate adaptation rate

Sources: Rosstat, data of sales companies, ACRA

The observed trend in this case does not mean a negative forecast, however, it indicates a more significant external dependence of the regions, which slows down transformation processes. Regions that had significant ties with western countries in the past in terms of the automotive industry, chemical industry, metallurgy, and mining in 2022 were forced to revise production and logistics chains, which increased production costs, led to the need to revise the terms of long-term contracts with counterparties and, as a result, often became the reason for reducing production volumes or filling warehouses with finished products.

Monitoring the dynamics of production processes is the basis for planning and making forecasts both at corporate level and at the level of regional and federal authorities, and therefore the analysis of the productive supply of electricity, disclosed in open sources with a shorter time lag compared to the industrial production index, can be used as an operational indicator of the state of the economy.