Regional economies reacting in different ways to the current socio-economic decline

5 august 2015

The Analytical Center is continuing to publish bulletins assessing various aspects of the course of the socio-economic crisis in Russia. The latest bulletin looks at the situation in the regions of Russia. Experts acknowledge that the unevenness of decline on a regional level is an important aspect of any socio-economic crisis, especially if the crisis is happening in Russia, where the economic space is highly diverse in terms of geographical conditions, economic resources and levels of development.

In order to study current trends for the regional development of the country, experts analyzed not only individual regions, republics and federal districts, but also groups of regions according to their level of development: highly developed, developed, moderately developed and less developed. Financial and economic centers (metropolitan areas) and regions that export raw materials in the highly developed group were studied separately because of their importance and fundamental differences.

Having analyzed several key indicators, including industrial production, retail trading, unemployment, consumer price trends, and indicators of the condition of regional consolidated budgets, experts drew the following conclusions:

 

The current socio-economic decline in Russia is uneven at regional level

· In the first six months of 2015 the situation worsened for the population: unemployment and prices are rising, consumption is decreasing

· In Q1 2015, Russia’s GDP fell 2.2% against Q1 2014, however not including net exports it dropped 10%

· At the end of May 2015, the retail trade turnover (at constant prices of 2012) was down against figures for January 2015 in 65 regions

· In the first six months of 2015 industrial production declined in all types of regions

· In the manufacturing industries there was a marked decline in the financial and economic centers and the moderately developed regions

· The varied levels of personal consumption in the country are linked to social inequality and the particular features of the localization of consumption by wealthy individuals

· At the end of 2014, in 20 constituent entities the regional debt was greater than 70% of the revenue, which can be considered a dangerous level of debt burden

· In metropolitan areas retail trading is declining, retail space is decreasing, and the rate of construction is slowing down, but with the decline in Russia’s industrial activity and the reduction in oil revenue, the situation currently looks better than in 2008-2009

More information can be found in the bulletin The Condition of Russia’s Regions in the Crisis.

Other bulletins on the socio-economic crisis can be found under Publications.