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The Economy of Saint-Petersburg

General Information

 

Data of Petersburgkomstat
Comments by the Committee on Economics
and Industrial Policy

 

The gross regional product (GRP) of Saint Petersburg
in 1998 was 81.5 billion rubles 1) (8.3 billion US dollars)

Dynamics of the GRP of Saint Petersburg and the GDP of Russia (in % of the previous year):

 

1996

1997

1998

1999
(forecast)

GRP of Saint Petersburg

91.3

98.6

98.3

97.0

GDP of Russia

96.6

100.9

95.4

97.0

Inflation in Saint Petersburg:

 

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999 (forecast)

consumer price index:
December-December of the previous year, %

__

364.6

2182.2

809.6

327.7

225

125.2

113

178.0

130.0

December-December 1990, times

1

3.65

79.56

644.1

2111

4749

5946

6719

11960

15548

Official US dollar exchange rate, in rubles

0.85

0.85

222.30

540.26

2246.34

4558.71

5217.65

5786.79

9.77682)

21.5102)

1) For 1998 - next evaluation using elaborated base of calculations (denominated rubles)
2) Denominated rubles


Growth in US dollar exchange rate compared to changes in the consumer price index:

econom1.jpg (21763 bytes)

 

Structure of the GRP of Saint Petersburg in 1998:

econom2.jpg (13352 bytes)

The 1998 Saint Petersburg economy as compared to other regions of Russia:

 

Volume of industrial production, in billion rubles

Volume of contract work carried out by enterprises of all branches of the economy, in billion rubles

Yearly average permanent population, in thousand people

Russia

1658.0

234.5

146534

Saint Petersburg

45.5

8.9

4706

Archangelsk Region

13.7

0.8

1485

Vologda Region

29.4

2.0

1331

Kaliningrad Region

5.0

0.4

947

Leninrad Region

16.3

2.3

1674

Murmansk Region

17.6

0.9

1026

Novgorod Region

7.5

0.9

735

Pskov Region

3.2

0.5

815

Republic of Karelia

8.2

0.7

773

Komi Republic

16.4

2.9

1157

Comments

The same basic tendencies noted in Russia as a whole were also witnessed in Saint Petersburg between 1990 and 1998: collapse of macro-indicators between 1991 and 1993, slowed rate of collapse between 1994 and 1996, relative stabilization of the situation in 1997. During the latter half of 1997 and from January through August 1998, the gross regional product (GRP) of Saint Petersburg was on the rise. However, this improvement was cut short by the Russian financial and economic crisis that started on August 17, 1998. During the reform years the GDP of Russia fell 42% while in Saint Petersburg, according to estimates of the Committee on Economics and Industrial Policy, the GRP fell no less than 45%.

When reforms first began, production and distribution were planned and handled by the Gosplan and Gossnab centralized systems, and the concept of «solvent demand» did not exist. As a general rule, there was a production deficit, i.e. solvent demand exceeded supply. So the drop in industrial production in the city was more apparent than that in Russia as a whole, where the decline of processing industries was made up for somewhat by extraction industries.

The share of the GRP of Saint Petersburg in the sum total of gross regional products in Russia made up 3.2% in 1994 and 3.3% in 1997.

Between 1995 and 1997 the rate of inflation in Russia and the regions was slowed considerably as compared to the rate in 1991-1994. The average monthly growth of prices on goods and services in Saint Petersburg during the reform years was higher than that of Russia as a whole, but lower than in Moscow. Between 1996 and 1997 relative parity was achieved in the dynamics of price changes on various markets, including the consumer market, industrial equipment, and investment; this parity was expressed in their coordinated movement.

The inflation rate was halted, on the one hand, by the absence of financial resources and, as a result, a drop in solvent demand and production by domestic manufacturers and, on the other, as a result of the saturation of the domestic market with imported goods and the prices established for these goods insuring high profits for importers. The low solvent demand of industrial enterprises, increasing inability to pay bills and increasing practice of non-monetary forms of payment have all told on price dynamics in recent years.

The reform years saw a sharp drop in the ruble rate with respect to the US dollar. The currency rate was relatively stable between 1996 and the first half of 1998, especially when the currency corridor was in place. However, the Russian’s government’s announcement on August 17, 1998, that it would not pay on its domestic and foreign loan obligations, a run of investors and banks on the hard currency market and the collapse of financial pyramids and a number of banks that were not controlled by the government led to a crash of the ruble exchange rate.

Nevertheless, Saint Petersburg remains the largest producer of industrial and consumer goods among the regions of the north west, both according to absolute indicators and in per capita terms. In 1998 the volume of consumer goods production in the city amounted to 13.0 billion rubles, or 2,700 per capita (in the Novgorod Region 2,500 rubles, in the Pskov Region 1,400 rubles, in the Leningrad Region 900 rubles). Production volumes in Saint Petersburg for dairy products, bread and baked goods greatly exceed similar indicators for neighboring regions.

Investments in fixed assets were bolstered by increased input of funds from enterprises and companies, the figure for which reached 53% this year (as opposed to 47% in 1997). At the same time, the share of funds provided by the federal budget decreased four times in 1998, from 16% to 4%.

Compared to other regions of the north west, in 1998 Saint Petersburg had the best indicators for volume of contract work and paid services provided to the population. This figure reached 107% in 1997. The unemployment rate among economically active members of the population remained low at 1.6% by the end of 1998.

Despite the continuing financial crisis in the country, the Saint Petersburg budget continues to be carried out successfully. Thus, according to preliminary data of the Finance Committee, budget performance in 1998 amounted to 84.9% of revenues and 82.8% for expenses. We can proudly state that even under crisis conditions Saint Petersburg continues to be one of the most reliable regions.

According to information from the Saint Petersburg administration Committee on Economics and Industrial Policy (CEIP), the average yearly labor resource figure for 1998 was estimated at 3,045,000 persons. We should also note the tendency for the labor resource figure to rise during the forecast period (to year 2001).

At the same time, the number of people employed in the economy is decreasing and in 1998 amounted to 2,332,000 persons (according to estimates). By 2001 this number will fall to 2,326,000 (99.2%) of 1997 levels, and the average yearly rate of decrease amounted to 0.03% or 2,000 people in average yearly human terms.

The structure of employment can be quantitatively expressed in the dynamics of employment according to branch and sector of the economy.

We can see that during the forecast period the level of employment has been decreasing slightly in material production.

Employment figures for branches of the economy (in %)

Branches of the economy

1996

1997

1998

Industry

25

23

21

Agriculture

1

1

1

Transport

9

9

8

Construction

11

10

8

Trade and public catering, material-technical supply and sales, provisions

12

14

19

Housing and communal sphere and non-productive forms of service

6

6

7

Health care, physical culture and social welfare

7

8

8

Education

10

10

10

Science and scientific service

8

8

7

Others

11

11

11

Dynamics of the distribution of employment across sectors of the economy, 1998-2001 (in %)

Economic sector  

Forecast2)

 

19981)

1999

2000

2001

Material production

58.5

61.8

61.8

61.8

Non-production sphere

41.5

38.2

38.2

38.2

1) Data of Peterburgkomstat
2)
CEIP forecasts.

According to data from Peterburgkomstat, in Saint Petersburg as a whole the average monthly wage at large and medium businesses in 1998 was 1254 rubles, and the social payments of one employee amounted to 36 rubles. This is higher than in 1997 by 18.2% and 3.2% respectively. The total wage of workers in the material production sector amounted to 63% of the total wage pool.

Average monthly wage for one employee according to branch of the economy in 1998

   

% of 1997

Branch of the economy

Rubles

Nominal

Real

Industry

1359

125.9

98.1

Agriculture

1031

107.6

83.8

Transport

1460

115.6

90.0

Telecommunications

2026

128.0

99.7

Construction

1561

110.2

85.8

Trade and public catering, material-technical supply and sales, provisions

1123

116.8

91.0

Housing and communal sphere and non-productive forms of service

1409

102.9

80.1

Health care, physical culture and social welfare

804

109.8

85.5

Education

773

117.6

91.6

Culture and arts

818

122.7

95.6

Science and scientific service

931

117.5

91.5

Financing, loans, insurance and pensions

2311

142.2

110.7

 

 

 

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