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In the Russian regions has accelerated the economic downturn

В российских регионах ускорился экономический спад

The growth of the Russian economy, which Rosstat captures three consecutive quarters at the Federal level, still not visible in most Russian regions.

In the area of sustained recession remain almost 60% of subjects of the Russian Federation – 49 of the 85 reports in the “Review of the state and business”, Higher school of Economics.

The economic downturn at the regional level continues for the second consecutive month and the rate is increasing: in April the composite index of regional economic activity fell from 49 to 47.1 points, showing a minimum value since December of last year.

Only 12 subjects of the Russian Federation showed an increase of at least 4 of 5 key sectors of the economy. It is 3.5 times less than in the beginning of the year. Almost simultaneously the front there is a drop in 18 regions, which account for one-third of the gross regional product of the country.

 

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Most problematic is the Novgorod oblast, the Chuvash Republic, Perm Krai and Republic of Buryatia, says the Deputy Director of “development Center” higher school of Economics Sergei Smirnov.

With such staticice to talk about the early economic recovery is hardly correct: the share of regions, which grow four or five sectors, remains significantly lower than it is typical for a phase of strong economic growth, he said.

 

The first to suffer the sectors focused on consumers whose incomes fell during the crisis, retail trade and construction, indexes of activity which dropped to 39 and 41 points.

The growth is in the industry, which, however, operates on the export or procurement.

The economic picture in the regions is more like not upward, but sideways, Smirnov says: “Obvious signs of acceleration remains to be seen. Speech can go only about the return to pre-crisis stagnation, which is characteristic for 2013-2014”.

Economic recession and the gradual withdrawal of support from the Federal center to the regions threatened by budget crisis by 2018, every fourth Russian region may be on the verge of default, warned in a December report, the international rating Agency S&P.

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Now the duty of each of the third region exceeds a critical level defined by the budget code – 50% of the income, and in the next three years it will increase by 1.5 times due to the fact that the government is curtailing lending to the budget at a reduced rate.

Regions will have to borrow money from banks and the market, and it is significantly more expensive. “By 2018, 25% of Russian regions the costs of debt service would exceed 30% of current revenue. We accumulate according to international statistics of defaults, this level of expenditure for debt service indicates a very high probability of default,” noted S&P.

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