Regions of Russia in the new economic realities

Abstract

In the first three months of the sanctions’ crisis, regions connected with the global market were hit harder: these are the exporters of oil, gas, metals, and regions of the manufacturing industries with a high share of imported components. The influence of specialization has increased; in industry the decline is stronger in the regions of the automotive industry, oil and gas production, ferrous metallurgy. The decline in retail sales is stronger in the agglomerations of the largest cities due to the departure of foreign companies and in some regions with low incomes, where the population is faster reducing consumption. The decline or stagnation of personal income tax revenues in May 2022 manifested in the regions of the fuel complex, metallurgy, in some depressed regions and in underdeveloped Republics, where the share of shadow business may increase. The risks of part-time employment are higher in the industrial regions of the Center, the Volga district and part of the Urals. The employment reduction risks in the market services are higher in agglomerations and other major cities, in part of the depressed regions; in resort regions they are mitigated by increased home tourism. The risks of regional budgets tax revenues decline are strongest in more developed and export-oriented regions. The Southern agrarian regions and the Far East (with the exception of Sakhalin) are going through the crisis more mildly due to the home demand for food products and its exports, and for the Far Eastern regions — due to orientation to the Asian markets, especially China. Moscow is likely to go through a new crisis, like the two previous ones, softer than other regions, especially in terms of the dynamics of household incomes and the budget revenues.

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