The Russian Economy Is Bursting At The Seams

Half of Russia's regions have slipped into industrial recession.

While Rosstat records growth in the Russian economy and increased production at factories and plants, almost every second region of the Russian Federation is already in industrial recession, writes The Moscow Times.

Of the 85 subjects of the Russian Federation, only 46 showed growth in industrial production in the first half of the year, analysts from Expert RA note in their "Monitoring of the Socio-Economic Situation" of regions.

Overwhelming decline in industry was recorded in North Ossetia - Alan Kalmykia (-9.9%) and Murmansk region (-8.9%) also made it to the top 5 subjects of anti-leaders. Industrial decline in each of them is associated with the sector of "manufacturing industries", according to "Expert RA".

More than half of the regions - 44 out of 85 - faced a decline in construction: in Buryatia, Murmansk, Magadan and Kostroma regions it became twofold (about 50%), and in Kalmykia construction volumes collapsed more than 8 times (-87.7%). Among the reasons - the growth of production costs, high interest rates and falling demand for housing, listed in "Expert RA".

Almost 40% of subjects - 35 out of 85 - faced a decline in revenues of local budgets, analysts point out. A headache for governors was the collection of profit tax - a key source of money for the regions, which provides them with every third ruble of their own revenues.

In general, the regions were short 223 billion rubles of profit tax (-7.8%) compared to last year. At the same time, in a number of subjects the decline has taken a collapse: - 53.9% in the Komi Republic, - 43.6% in Karelia, -35.5% in the Nenets Autonomous Okrug, -33.3% in the Chelyabinsk region.

Enterprises in the mining industry, timber industry and financial sector have started to pay less taxes, according to Expert RA. Business costs are growing, loans are becoming more expensive, and purchase prices in key sectors of the economy are rising due to sanctions. As a result, the budgets of the regions for six months formed a deficit of 393.9 billion rubles, although a year earlier they were in surplus by 756.2 billion.

In Russia as a whole, according to Rosstat, industry adds 0.8% in the first 7 months of this year. This, however, is 7 times less than last year, when the output increased by 5.6%.

Russian GDP growth has slowed down fourfold - to 1.1% in 7 months. The government, which initially expected economic growth of 2.5%, plans to reduce the forecast to 1.2%, a source familiar with the situation told Interfax on the eve.

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