Eastern European Markets

(December 30th 2010)

The Leningrad region in the first half of 2010: Biannual Review
University of Eastern Finland – Karelian Science Centre, CEMAT 2010

The recession appears to be over

In the first half (1H) of 2010 the economic situation in the Leningrad region improved notably. Two main pillars of the regional economy - manufacturing industries and agriculture – increased their output in real terms by 12.9% and 3.0% respectively, in comparison to the 1H of 2009. Retail turnover and real personal incomes grew by 12.0% and 11.6% respectively. At this point the figures seem to indicate that the recession is over for the Leningrad region.

It should be noted that in June 2010 the Leningrad Regional Government approved the Regional Development Strategy until 2025. This document was prepared by a group led by Zhores Alferov, who is a Nobel Prize winner (in physics). The Strategy has not been published yet: it should first be approved by the Regional Legislative Assembly. However, some basic economic forecasts have been made public. For example, the Strategy stipulates that from 2010 to 2025 Leningrad’s GRP will increase 2.2 times, while its industrial and agricultural output will grow 2.1 and 1.5 times respectively.

Transport services, investments in fixed assets and construction activity will increase 2.9, 2.1 and 2 times respectively over this period. Furthermore, according to the Strategy, real personal incomes should grow 2.4 times, while the share of people earning less than the minimum cost of living should shrink from 14.8% in 2009 to 5% in 2025. The Strategy also envisages that from 2010 to 2025 some 15,000 new jobs will be created in the region, of which 9,000 will be located in the most depressed districts, in the southwest and east, of the Leningrad region.

Strong growth in industry

In the 1H of 2010, Leningrad’s industry demonstrated considerable growth, and the volume of industrial output exceeded its pre-crisis level. Among the most important events during this half-year, it is possible to mention the opening of a new metal casting workshop at the Tikhvin Railroad Car Plant, the completion of a floating oil rig at the Vyborg Shipyard, the opening of a meat-processing and logistics centre of Finnish company Atria in Gorelovo, the installation of a new power generator at the Svetogorsk hydro-power plant, the opening of a new plant of the French company Schneider Electric near Gatchina, and the start of production of wooden pellets at a new plant in Podporozhie in the east of the Leningrad region.

There are also a number of future industrial projects, which are worth mentioning. Firstly, the Federal Ministry of Industry and Trade has approved four new projects in Pikalevo; two of them deal with the production of bio-fuels and polymers, while the other two envisage construction of a greenhouse and a factory producing wooden house kits. Secondly, it was announced that OOO Ladozhsky Kirpich 29.06.2010 intends to build a new brick factory in the Volkhov district.

Thirdly, American Ford Motors Company announced its intention to expand its plant in Vsevolozhsk by hiring an additional 230 workers in order to meet a growing demand for Ford’s Focus and Mondeo cars. In the 1H of 2010 Ford’s


Economic Monitoring of North-West Russia (http://www.hse.fi/ecomon)
The project “Economic Monitoring of Northwest Russia” was launched in 2000 with the aim to provide regular, comprehensive and systematic reporting on the socio-economic development in the region. The monitoring covers today six Northwest Russian regions: The City of St Petersburg, Leningrad, Kaliningrad, Murmansk and Novgorod provinces, and the Republic of Karelia.

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Professor Riitta Kosonen
Director, Center for Markets in Transition (CEMAT)

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