Grim economic outlook puts brakes on border traffic

Number of border crossing at Storskog increased every year from 2009 until late 2014. Down 30 percent in December and further down 37 percent first week of January.

Cross-border shopping-tours slumps sharply the first 10 days of January as the ruble continues to decline and the Russian government predicts a 4 percent drop in economy this year.


Stein Kristian Hansen with the immigration police at Storskog check-point says to BarentsObserver the number of crossing sank the 10 first days of January to 8,688.

That is down 37 percent compared with the 13,806 crossings registered in the same busy shopping period 2014. The first days of January are normally the busiest period of the year as Russian vacationers drive over for shopping in Norway.

Food, furniture, electronics and clothes are practically 50 percent more expensive for Russians abroad today than only a month ago. The ruble was down some 2 percent Monday morning as trading started in Moscow.

In December, traffic over the Russian-Norwegian border in the north was down 30 percent. The sudden slump comes after a  30 percent increase year-on-year annually since 2009.

Last week, Russia was downgraded to the lowest investment grade by Fitch Ratings. The agency argues  that the economic outlook has deteriorated significantly since mid-2014 following sharp falls in the oil price and the rouble, Western sanctions coupled with a steep rise in interest rates.

Russia’s Central Bank has estimated that average oil price of $60 per barrel  could cause GDP to shrink 4,5 to 4,7 percent in 2015. A barrel of brent crude is traded at 48,4 Monday afternoon.

For Finnish Lapland, the decline in border crossings is even more dramatic than on the Norway’s border to the Kola Peninsula. The first week of 2015, traffic over Raja-Jooseppi and Salla plunged with 56 percent compared with the same week 2014.