Murmansk pins key part of its future to the local sea port (photo: Atle Staalesen)

Murmansk outlines tough future

Among the development scenarios for the Russian Arctic region is a critical contraction of investments, plummeting consumer demands and a major shrink in economy.
October 23, 2015

The three-year economic forecast presented by regional Economic Development Minister Yelena Tikhonova outlines a set of serious challenges for regional state of affairs.

The plan, which is available on the Murmansk government website, includes three different scenarios and stretches until year 2018.

In its negative scenario, the regional government foresees a ”sharp contraction of investment and consumer demands to a critical extent”, which could lead to a ”significant decline in economic development”.

The medium scenario, which is used as basis for the regional 2016 budget parameters, outlines a moderate improvement on the international raw material markets and stable ruble rates. Meanwhile, the effects of international sanctions and counter-sanctions will persist all through the period, the scenario reads.

In its moderate-optimistic scenario, the plan outlines improvements on the raw material markets, and enhanced activity level for the regional sea ports. The region’s current positions will be kept at the same time as industrial production picks pace. The ruble will strengthen and regional economy experience growth.

Commenting on the new plan, regional First Deputy Governor Aleksey Tyukavin says his government has a ”moderate optimism” about the future. ”The economy is adjusting to the new realities”, he says, Murman.ru reports.

The powerful industrial companies in Murmansk have so far managed to keep a high level of profits despite the plummeting raw material prices. That trend, however, is supported by the weaking of the ruble.

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Recently, a number of Russian industrial majors, several of them with subsidiaries in the Kola Peninsula, have reported increasing hardships. Among them is both Norilsk Nickel, which is slashing its investments level, as well as Severstal which in Q3 of the year recorded a $130 million deficit.

Interestingly, at the same time as the regional government makes public the new economic forecast it also announces that it aquires a 5 billion ruble new government credit. That is to help regional authorities overcome the quickly growing growing debts, Murman.ru reports.

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