Experts named the most vulnerable regions in the sanctions crisis

Moscow State University scientists presented a short-term forecast for the development of the situation in the subjects of the Federation Because of the sanctions, Russian regions and cities with a large proportion of people employed in the manufacturing industry will suffer the most, experts predict. Less crisis will affect the Far Eastern and Siberian regions,

The main risks for the Russian regions due to the consequences of the current crisis will be a decline in industrial production, an increase in unemployment - hidden and official, as well as a decrease in tax revenues of regional budgets. The problems of the subjects of the Federation against the backdrop of sanctions pressure were classified by an expert on regional economics, professor of the Faculty of Geography of Moscow State University. Lomonosova Natalya Zubarevich at a panel session at the Lomonosov Readings conference held on April 18 (RBC got acquainted with the materials of her speech).

The sanctions crisis is unlike the previous economic shocks of the last decade — the oil years of 2014-2015 and the CORONAVIRUS 2020 — neither in terms of the scope of the affected industries, nor in terms of the speed of recovery. According to Zubarevich, during the crisis of 2015, there was an uneven decline across industries, covid hit the economy, albeit hard, but it managed to recover quickly, and the new crisis will affect everyone.

Industries and regions at risk

The withdrawal of foreign companies from RUSSIA, sanctions bans on the supply of components, internal restrictions on the EXPORT of goods (for example, a number of crops), a decrease in demand for Russian raw materials, logistical chaos - all these are the reasons for the problems that the regions will face, Zubarevich predicts.

The expert is most concerned about industrial centers, where the share of people employed in manufacturing is high. Two-thirds of industrial production falls on 16 regions of Russia, Zubarevich cites data. The share of people employed in manufacturing industries is highest in the Central Federal District (most of all in the Vladimir and Kaluga regions), the Volga region (Ulyanovsk region, Mari El, Udmurtia), in the regions of the oil and gas Urals (Chelyabinsk, Sverdlovsk regions) and the Northwestern Federal District (Novgorod and Vologda regions).

Among the industries at risk, Zubarevich singles out mechanical engineering. In addition to the direct losses that the regions will suffer from the departure of foreign manufacturers, including in the automotive industry (Kaluga region), a decline is expected by enterprises using imported components, this applies to transport, energy, oil and gas engineering (Tver, Sverdlovsk regions). At the same time, the problems of the largest players will affect related enterprises in other regions.

Zubarevich predicts difficulties for the regions, where the share of enterprises of the fuel and energy complex and petrochemicals is high. In the coal industry, the most severe consequences are for the Kemerovo region due to restrictions imposed by the European Union on supplies to Europe (before the sanctions, this market accounted for 25% of all Russian coal exports). “It is impossible to redirect such a volume to the Asian market due to the exhaustion of the capacity of the Trans-Siberian Railway,” the expert warns. Personal sanctions and export bans will affect metallurgical centers, primarily focused on the markets of Europe and the usa(Cherepovets in the Vologda Oblast and Stary Oskol in Belgorod Oblast). Due to sanctions against businessman Alexei Mordashov, Severstal lost the opportunity to export its steel products to Europe, and, in addition, the EU banned the import of steel and iron from Russia for €3.3 billion a year.

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The timber and pulp and paper industries are under attack due to a ban on the export of products to the European Union. If factories in Siberia are contracted to supply cellulose to CHINA for several years in advance, then it is problematic to redirect products from Karelia, the Arkhangelsk region, Komi, which went to Europe by rail, to China, Zubarevich notes.

“Obviously, the Far Eastern and Siberian regions that have trade ties with China will suffer to a lesser extent. In turn, the subjects of the Russian Federation with a high share of the economy associated with foreign companies and imported components, such as the Kaluga, Kaliningrad, and Leningrad regions, may experience difficulties,” adds Elena Anisimova, Senior DIRECTOR, HEAD of the ACRA Regional Ratings Group.

Uncertainty factor

In addition to industry, the sector of services and trade will take the blow, the professor of Moscow State University believes. This area is most developed in large cities and regional centers - those employed in it will be at risk of being fired due to a reduction in demand and the solvency of consumers. If big business can afford to keep jobs at least at the minimum wage, then employers from the service sector cannot do that, the expert warns. She sees a high degree of risk for an increase in layoffs in the Voronezh, Ivanovo, Kaliningrad, Rostov, Nizhny Novgorod, and Penza regions.

At the end of 2022, the consensus forecast for unemployment is 7-8%, for a decline in real incomes of the population - 5-10%, Zubarevich cites estimates. At the same time, she predicts an increase in hidden unemployment and underemployment, when employees are transferred to part-time work with a reduction in their usual salary.

As Zubarevich pointed out, her forecasts are relevant at the end of the first ten days of April - long-term estimates do not make sense due to rapidly changing conditions.

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Anisimova also agrees that forecasts quickly become outdated in a situation of uncertainty. “The results of the year will depend on the exchange rate of the ruble, and on the country's ability to rebuild export and import flows, and on solving logistical issues,” she says. Uncertainty, according to her, is also added by the fact that the actual dependence of the regional economy on the foreign component is unknown - there are no such data.

According to ACRA, regional spending could be significantly affected by inflation in the event of a decrease in tax revenues, both in terms of taxes on profits and aggregate income (the latter include the main taxes on small businesses), and in personal income tax due to rising unemployment. “In this case, the deficits of regional budgets will be very significant. But, according to our calculations, last year 75 constituent entities of the Russian Federation had increased account balances, which will allow them to partially finance the deficits,” Anisimova said.

Measures to support the regions

To date, the authorities have already developed a number of measures to help the regions through soft loans. On April 20, the State Duma adopted the law on supporting the financial stability of regional budgets in the second and third readings. Up to 390.7 billion rubles will be allocated for budget loans to refinance the debt obligations of regions and municipalities. from the federal treasury (initially it was planned to allocate 255.3 billion for these purposes).

The approved amendments to the Budget Code, as reported by the Ministry of Finance, involve three innovations. First, the regions will receive special conditions for obtaining short-term loans from the Federal Treasury departments: the loan limit will be increased to 10% of the region's income. The second measure: the subjects will be able to receive additional budget loans at 0.1% per annum to repay their market borrowings that took shape at the beginning of the current year and are due in March-December 2022. Finally, the third block of changes frees the regions from repaying debts on budget loans this year in the amount of just over 60 billion rubles. As the representative of the Ministry of Finance clarified, this will affect 75 subjects of the Federation.

In addition, following a meeting with the president held on March 16, the governors of the regions were recommended to personally head the operational headquarters for the sustainable development of the subjects. The government was instructed to carry out additional indexation of subsidies to equalize budgetary security. Also, the government, together with regional administrations, should “ensure in 2022 a reduction in the level of poverty of the population and income inequality of the population.” The block of instructions of the president also concerns support for Russians who lost their jobs after March 1, and families who faced a significant decrease in income during this period.