Appeal from Nizhny Novgorod Region Industrialists
Industrial leaders in Russia's Nizhny Novgorod region have petitioned local authorities to escalate their concerns to the federal government in Moscow. In a letter, they expressed alarm over a sharp decline in investment, profits, orders, and production over the past year. They warned that this situation threatens mass job cuts across the region.
According to the industrialists, the primary debtors are major Russian state-owned corporations, specifically:
- United Shipbuilding Corporation
- Roscosmos
- Rosatom
- Rostec
Unpaid bills owed to local businesses have surpassed 100 billion rubles. A survey indicates that if conditions do not improve, approximately 20,000 people in the Nizhny Novgorod region could lose their jobs in the second half of the year. Some strategically important companies have already reduced their employees' working hours.
Russia's Broader Economic Climate
The wider Russian economy is also a cause for concern. The Central Bank of Russia has raised its key interest rate to 21%, signaling a tightening of financial policy. Russia's annual economic growth plummeted to 1% last year, down from 4.9% the previous year. Regional budget deficits across Russia have swollen by more than 1 trillion rubles, reaching 1.48 trillion. Nizhny Novgorod, in particular, anticipates a budget shortfall of nearly 30 billion rubles.
The industrial sector is witnessing a significant downturn: sales for the GAZ Group fell by 33% to 40,570 units following the imposition of U.S. sanctions. A survey of over 50 companies in both military and civilian sectors revealed that 70% of firms report declining investment, and 40% of civilian enterprises stated their profits have at least halved. Notably, not a single company reported an increase in orders.
Gleb Nikitin, a representative of the industrialists, stated: 'We have had to refuse ministries expenditures that are truly important but are not an immediate priority.'
This appeal from Nizhny Novgorod's industrialists underscores severe strains emerging within the Russian economy, exacerbated by the actions of state-owned corporations. The high level of debt, coupled with falling investment and production, could lead to significant social consequences, including widespread layoffs. This regional distress comes amid a national backdrop of high interest rates and economic stagnation, suggesting the situation may worsen without urgent government intervention to stabilize local economies. The reliance on state defense spending has not shielded key industrial regions from broader financial pressures.