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Economic development of the Republic of Karelia in 2005

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The basic results of social and economic development of
the Republic of Karelia
in 2005 and within the period from 2002 to 2005

Due to measures taken it was possible to achieve positive results of development of economics as a whole and stable functioning of social sphere. In 2002 - 2005 steady production growth in the majority of branches of economics and growth of export was provided in the republic. Volumes of the retail commodity circulation, paid services rendered to the population, commercial turnover of goods of transport enterprises increased annually, profit of enterprises and real wages and pensions increased.

Among regions of the North of Russia during last seven years Karelia has been stably included in the list of first ten regions (8 place in 2005). In 2005 the highest in recent years parameters of social and economic development of the republic have been achieved.

According to the electoral programme of the Head of the Republic Karelia Together to Success of Karelia! it was supposed to increase volumes of production by 30%. Actually within the period from 2002 to 2005 the physical volume of the produced industrial output has increased by 35.9%, and, by estimations, total regional product in the comparable has increased prices by 23.8%. In 2005 the highest in the past five years growth of industrial production of 118% compared to 2004 has been achieved (104% in the Russian Federation).

In comparison with 2004 significant growth of volumes of metallurgical production and production of finished metal articles (156.8%), production of machines and equipment (125.2%) is provided. Volumes of extraction of metal ores and other minerals, volumes of production in pulp and paper industry, publishing and polygraphic activities, production of foodstuff and other kinds of activity have increased. In comparison with 2004 it has been produced more iron-ore pellets (117.4%), plywood (123%), paper (108.6%), cardboard (128.9%), paper sacks (120.8%), building nonmetallic materials (131.4%) and other kinds of production.

At the same time the following branches lag behind parameters of 2004: power generation, production of woodchip boards, commodity cellulose, constructions and modular ferro-concrete products, volumes of timber hauling.

The foreign trade turnover of the Republic of Karelia in the past four years was characterized by dynamical growth. In 2005 it has made $1245 million, having exceeded the level of 2001 by 58%. For the first time the volume of export of production of Karelian enterprises has exceeded $1 billion and in 2005 it has made $1045 million, that by 62% exceeds the level of 2001 and by 24 % - the level of 2004. Except for traditional kinds of production (iron-ore pellets, timber and articles made of it, and fish) in recent years in Karelian export there have appeared new kinds of production of processing branches, namely ferrous metals products and electric equipment.

Last years the business reputation of the Republic of Karelia has become considerably stronger, the trust of investors and creditors has risen.

Now, according to the Ministry of Economic Development and Trade of the Russian Federation, Karelia is on the 21 place in Russia on the level of investment appeal and on the 6 place on the level of investment risk. It is confirmed with figures.

The volume of investments has grown from 8,4 billion roubles in 2001 to 14,7 billion roubles in 2005 and in comparable estimation has 1.2 times exceeded the level of 2001. The volume of foreign investments has increased from $41,7 million in 2001 to $74,5 million in 2005, or 1.8 times. The share of direct investments in years varied within the limits of 10-39% from total amount of foreign investments.

In the republic there operate large domestic and foreign companies, such as SUAL and Severstal holdings, Stora Enco and IKEA concerns. Significant investments into economy of Karelia came from Northwest bank of the Savings Bank of Russia, Russian Railways Open Society, Gazprom Open Society.

In 2002-2005 in the republic there have ben implemented more than fifty large and small projects, first of all in the sphere of industry and transport. Among the most significant there are construction of the main Petrozavodsk - Kondopoga gas main, electrification of Idel-Svir and Sumposad - Malenga pieces of line of Octyabrskaya railway, reconstruction of Segezha Pulp and Paper Mill Open Society factory, strt up of the 10-th paper-making machine in Kondopoga Open Society.

High credit rating recently appropriated to Karelia enables to improve conditions of attraction of financial resources. As a matter of fact, the republic has received for itself the additional tool of managing costs of credit and investment resources, and increasing liquidity of rouble promissory notes.

In 2002-2005 the Government of Karelia consistently worked with federal enforcement authorities concerning attraction of means of the federal budget for realization of actions of federal target programs and the federal address investment program in the republic. On the level of attraction of means from the federal budget per capita Karelia is on the 3 place in the Northwest federal district (after St.-Petersburg and Leningrad region). This parameter in the republic is higher than the average across Russia.

With attraction of means from the federal budget reconstruction of the White Sea - Baltic channel, Kizhi open air museum, objects of Valaam archipelago, Petrozavodsk conservatory, dams on the Vama river (Vodlozero water basin of Pudozh district), construction of the Supreme Court building of the Republic of Karelia was carried out.

By the 300th anniversary of Petrozavodsk reconstruction of buildings of the National Theatre and the State Museum of Local Lore, History and Economy, and historical center in Petrozavodsk is completed. The 1-st turn of the academic and laboratory case of PetrSU and the 2-nd turn of the quay of Onego lake in Petrozavodsk, objects of Besovets airport complex were put into operation.

According to the Modernization of the Transport System of Russia federal target program construction and reconstruction of motorways of federal and republican value with the general volume of assignments of 3766 million roubles in 2002-2005 including 3164 million roubles from the federal budget were carried out.

Due to all sources of financing in four years there have been put into operation apartment houses for veterans of the Great Patriotic War and militia officers in Belomorsk, Segezha, Kostomuksha, Petrozavodsk. 7 boiler-houses have been reconstructed in districts of the republic, water head adjusting capacity in the town of Lahdenpohjathe, Svyatozero-Verkhniye Vazhiny and Syapsya-Chuinavolok power transmission lines, water treating facilities in Sortavala and Vidlitsa, new heating mains and water supply systems are put into operation .

A hospital and a polyclinic in the settlement of Pryazha, 2 ambulance stations, 4 schools, a kindergarten in the village of Sheltozero, regional domestic affairs department building in Olonets are constructed.

Due to means of Kondopoga Open Society the Ice Palace, sports complex and a number of other objects in Kondopoga are constructed.

Acording to mandates received during election campaign of the Head of the Republic of Karelia of 2002, there have been constructed and put into operation 13 objects. Activization of investment activity promoted growth of volume of contract works in construction which in 2005 has made 5,1 billion roubles, or 110.5% in comparable prices to the level of 2004.

Implementation of the republican target program Habitation for 2004-2010 continues. In 2002-2005 total area of 336 thousand sq.m. apartment houses of has been put into operation including 88,5 thousand sq.m. in 2005. More and more families in the republic improve their living conditions using the system of mortgage housing lending. In 2005 there were 516 of such families compated to 21 in 2002. Within the past 4 years at direct participation of means of federal and republican budgets 1718 families of the republic have received the state support at construction (purchase) of habitation, including 728 families in 2005 (80 families in 2002).

Increase in expenditure for implementation of social programs, construction of socially significant objects became possible owing to stable growth of incomes of the consolidated budget of the Republic of Karelia. In comparison with 2001 in 2005 they have increased from 6.2 to 13.8 billion roubles, or 2.2 times, including personal incomes from 4,9 to 11,5 billion roubles. In 2005 in relation to the level of 2004 incomes have increased by 32%, including personal incomes by 42%.

Since 2001 the volume of expenditure of the consolidated budget of the Republic of Karelia has grown from 6,3 to 13,5 billion rbl. in 2005, or 2.15 times. In comparison with 2004 expenditure have increased by 24%. For the first time in recent years the consolidated budget of the Republic of Karelia and the budget of the Republic of Karelia are executed with proficiency.

The social orientation of budgetary expenditure has increased. So, if in 2001 expenditure for financing of establishments of the social sphere and social policy made 48 percent of the total amount of expenditures of the consolidated budget, or 3 billion roubles, in 2005 it made 66 percent, or 8,9 billion roubles. Thus, expenditure for social needs for 4 years has grown on 5,9 billion roubles, or 3 times.

Within 2002-2005 implementation of programs aimed at improvement of the status of a family, children, middle aged and handicapped people, needy citizens was carried out. The annual increase in budgetary expenditure for social policy by 15-20% enables consistently to raise social security of pensioners, handicapped people, children and large families.

Besides, within a number of years due to means of the Pension fund of Russia social programs have been implemented in the republic within which frameworks major overhaul of retirement homes for aged and handicapped people is carried out, equipment and stock for social establishments is purchased, moneyed assistance to needy citizens is rendered.

The volume of the budgetary funds directed on reforming of housing and communal services grows constantly. In 2005 more than 40% of means of the Investment program of the Republic of Karelia have been allotted for construction, modernization and repair of objects of municipal services, in 2006 it is supposed to allocate more than 44% for this purpose.

Active state support of agriculturl enterprises of the republic rendered by the Government of Karelia in the last few years has allowed to stop annual reduction of agricultural production and in 2005 to achieve parameters of 2004 (the index of physical volume has made 100.2%).

On dairy livestock yield Karelia was included into the five of the best regions of Russia: on the average in the republic in 2005 milk yield per cow has made 4585 kg of milk (3313 kg in the Russian Federation).

The Government of the republic supports fish industry of the republic. In 2005 it has allowed to put into operation 3 more trout farms and to increase production of commodity trout and fry to 5,8 thousand tons, that exceeds the level of 2001 2.9 times. About 70% of the Russian trout is bred in Karelia.

In 2002-2005 financial results of work of enterprises of the republic improved consistently. According to the Karelian Committee for Statistics, in 2005 balanced financial result on large and medium enterprises has made 11,2 billion rbl. of profit, that 6.4 times exceeds the level of 2004, and 4.6 times exceeds the level of 2001.

On results of 2005 the profit of profitable enterprises has made 13,4 billion rbl., that 2.8 times exceeds the level of 2001. Almost 10 billion rbl. of profit is received according to the "Extraction of Minerals" activity category that is related to successful work of Karelsky Okatysh (Karelian Iron-Ore Pellets) Open Society. The favorable conjuncture developed on ferrous metals on international and Russian markets in 2005 has allowed the enterprise to increase profit 8 times to the level of 2004.

In 2005 the monthly average nominal wages per one person working in economy of the republic have made 8747 roubles, that exceeds the level of 2004 by 25%. Thus, rates of growth of average wages exceeded rates of growth of the size of the living wage and consumer prices (110% in December, 2005 compared to December, 2004). As a result in 2005 real possessed monetary incomes of the population have increased by 4.4%, and real wages - by 12.3%.

The share of the population with incomes below the living wage was reduced from 24.1% in 2001 to 20.9% in 2005. Real possessed incomes of the population in 2002-2005 have increased by 37%, real wages have grown more than 1.5 times that was promoted by gradual decrease in inflation in the republic: from 18.3% in 2001 to 10% in 2005.

Situation at the labour market is stabilized in the republic. Basic parameters of employment and unemployment testify to positive dynamics of labour processes. Scales of general unemployment are reduced annually, activity of citizens looking for job grows.

Number of the registered unemployeds in 2005 has changed slightly (0.4% growth). The level of official unemployment by the end of 2005 has made 3.5% from economically active population and remained the same as by the beginning of 2005.

Technical support
Created: April 10, 2006. Last updated: April 13, 2006.
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