Bleeding industry puts economy in red

Figures from 2013 show a Russian regional industry struggling with lower output.

Several years of weak industrial output are bringing down the economies of Russian Arctic regions. In 2013, all the federal subjects in the Russian Barents Region saw a significant decline in their respective key industries.


Despite the number of government measures taken to get the country back on track after the 2008-2009 financial crisis, the economy continues to falter. Figures from 2013 show that the Russian GDP grew only 1,4 percent in the course of the year. Industrial production was on the verge of going negative with a growth of only 0,3 percent, data from the Russian Statistical Service show.

With the exeption of the crisis year 2009, the figures are among the worst in the country over the last 15 years.

The situation in the regions is no more cheerful. Figures assembled by BarentsObserver show that all the five federal subjects in the Russian part of the Barents Region saw their industrial productions decline in 2013. In two of the regions, the industry even went negative, in the Republic of Karelia with as much as 8,7 percent. In Arkhangelsk Oblast the downturn was 0,4 perent. The stongest economy in the region, the Komi Republic, had a production growth of 1,7 percent, down from 3,4 percent in the previous year, while Murmansk Oblast had a modest production growth of 0,6 percent.


The construction sector, another illustrative growth parameter, shows a similar negative trend. In Komi Republic, the construction industry dropped as much as 23,4 percent year-on-year, while it in Murmansk Oblast dropped 6,5 percent.

The continued downturn in the Russian regions comes after the federal government in early 2013 introduced a set of measures aimed at revitalizing the economy. According to Presidential Adviser Andrey Belousov, these measures were to help small and medium-sized companies develop, enhance investments and increase companies’ access to credits. The key reason for the troublesome trend is the unfavouable credit situation with little money being made available to companies, Belousov says to newspaper Kommersant. In addition, he argues, another reason for the stagnation is simply “in our heads”, in our way of thinking.