St. Petersburg in the first half of 2011
Economic development: industrial growth
In the first half of 2011, the social and economic development of St. Petersburg has been stable. Industrial production has grown by 16.7% compared to the first half of 2010; and corresponding growth in manufacturing industries has been 17.5%. Communication and retail trade recorded somewhat solid growth (3.8% and 4.4%, correspondingly). However, the construction sector has
The turnover of companies in St. Petersburg has grown by 21% in the first half of 2011 compared to the corresponding period of 2010 (in current prices) and is equal to 2,755.3 billion rubles.
According to preliminary estimates, the city’s gross regional product grew by 6.2% in the first half of 2011 which is 2.2 %-points above the overall Russian figure.
Forecast on Saint Petersburg’s economic development for first half of 2012
CEMAT’s December 2010 forecast for Saint Petersburg’s industrial production growth for the first half of 2011 was 6% for industrial production and 11% for retail trade. This time, the actual outcomes (16.7% and 4.4%, respectively) were quite far from our forecasts due to some exceptional developments. In the May report we noted that high energy and raw material prices could raise industrial growth, which now seems to have occurred but with a magnitude that is surprisingly large.
Concerning retail sales, the development was stunningly weak and the main culprits were high food prices as well as heavy increaser in service tariffs in the beginning of the year. In our last report we predicted growth figures for all of 2011 to be 13% for industrial production and 4% for retail trade. Based on the latest data these forecasts are quite well in line with
However, if the Euro crisis is not resolved by the turn of 2011-2012, a European led global recession is a completely plausible outcome, which will negatively affect city’s economy. This will be our crisis scenario. Even in the baseline scenario however, we expect the region’s industrial production growth to somewhat moderate since physical production has now completely recovered from the drop caused by the financial crisis. We also expect industrial production to grow around 9% during the 1H2012. In the crisis scenario we, however, expect a rapid deterioration as was seen in 2009 and predict a negative growth of -3% for the 1H2012.
For retail trade growth we also present two different forecast scenarios. In the baseline case we expect retail trade to pick up pace, as food price pressures have started to ease, and reach 7% growth for the 1H2012. Taking into account the unexpectedly weak retail development during first half of 2011, we believe that sales development would shift into negative territory in the crisis scenario where we would expect retail trade to generate -2% growth for the first six months of 2012.
Economic Monitoring of North-West Russia (http://www.hse.fi/ecomon)