(Bloomberg) -- Russian industry expanded for the third straight year in 2023 as the government’s spending on its prolonged war on Ukraine helped counter the impact of sanctions imposed by the US and its allies.

Industrial production increased by 3.5% last year after 0.6% growth in 2022, according to data published Wednesday by the Federal Statistics Service. The rise in manufacturing among industries benefiting from military orders last year more than offset a slump in mining output, data show.

The figures show businesses have adapted to “the current external economic conditions,” the Economy Ministry said in a statement late Wednesday. 

The scale of Russia’s transition into a war economy was underlined by the three fastest-growing categories of manufacturing — which include goods such as bombs and weapons, aircraft and rocket engines, and ships and combat vehicles. Output under categories like “metal goods,” “computers, electronics and optics,” and “other transport” jumped by as much as a third compared to 2022. 

The 1.3% drop from last year in output from extraction industries, like mining, oil and gas, was largely due to a voluntary reduction in oil production, the Economy Ministry said in a separate statement. Russia, in coordination with its OPEC+ allies, pledged last year to reduce its crude production and maintain the cuts through 2024. The country stopped disclosing data on oil output last year. 

The latest data offer some support for recent claims by Russian officials that the country has boosted its military production despite efforts by the Group of Seven and the European Union to break the Kremlin’s war machine through stringent sanctions including an oil price cap. Defense Minister Sergei Shoigu said Monday that production of missiles for air defense systems had doubled, without providing figures. Previously, he said tank production had also increased by seven times. 

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The Kremlin plans to keep the economy on a war footing for at least the next three years, according to its budget plans, ramping up spending on arms production. That’s as Ukraine is running short of weapons to protect its cities, and vital aid from the US and the EU has been tied up by political disputes. 

The war, now approaching its third year, has settled into a stalemate, making a steady supply of weapons and munitions crucial to both sides.

Russian defense plants have been put on round-the-clock production schedules, and reports abound in local media of converted shopping centers and bakeries that now also manufacture military drones. Kalashnikov Concern, Russia’s flagship arms manufacturer, has developed new types of weapons that it plans to present at the World Defense Show 2024 in Saudi Arabia next week, according to state defense-industry conglomerate Rostec. 

Read more: Russia Degrades Ukraine Defenses as Zelenskiy Spars With General

Russia has also lined up supplies of weapons and other support from Iran and North Korea. Satellite imagery since October shows a steady flow of trade between North Korea and Russia that South Korea estimates includes more than 2 million rounds of artillery and several ballistic missiles.

(Updates with Economy Ministry comments in third, fifth paragraphs.)

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