The latest Barents Monitoring report from Arkhangelsk Oblast reads that the regional industrial production index experienced significant growth in February and March, and that this trend continued all through the second quarter of the year. That came after a dramatic drop in the end of last year and early 2009. The total industrial production growth totaled an 5,2 percent in the first six months of the year. However, this growth was mainly achieved due to positive dynamics in the mining industry. Other industry in the region continued to decline.
The saw-timber production ended up on its lowest levels in ten years even despite an impressive 40 percent jump in the second quarter of the year and the regional construction industry remains on its lowest level in five years.
Likewise, the investment activity in the big and medium-sized enterprises remained on the same level as in Q1, which is almost twice lower than in the same period last year.
In the second quarter of the year, electric power generation dropped 19 percent. That is less than in Q1 but far below 2008 results. From January till the end of June 2009 the total drop in the monthly electric power generation amounted to almost 33 percent.
The companies’ lower profits also negatively influenced the state of the regional budget, which subsequently created difficulties in the regional administration’s execution of social obligations. The share of the profit taxes in the regional budget — one of its main pillars dropped more than 10 times – from 24,5% in 2008 to 2,3% in 2009, - and this may bring unpredictable consequences for the social sphere of the region in the future.
The biggest growth in budget spending was seen in the social and health care sectors (more than 30 percent year-on-year) while spending on education dropped. Budget investments in the industry, energy sector and construction, which normally amount to 4-6 percent of the regional budget, have now been reduced to a zero level. That is a bad sign for a region with high development ambitions.
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