Crisis is price of global market integration, Sumin claims

26 February 2009 (12:54)

‘Historically, and due to the peculiarities of our top industries, Chelyabinsk Region has grown to greatly depend on the global market opportunities, that is, on the export and metal prices. The current crisis isn’t the price we have to pay for being concentrated on the metallurgical sector. This is the price of global market integration. However, we’d be forced to pay even more dearly if we steered clear of new technologies, of foreign economic connections, and of the global trade and production experience,’ Governor of Chelyabinsk Region Petr Sumin declared during his annual address to the Legislative Assembly and the region’s dwellers.

The Governor said that more than half of the local production facilities had been upgraded and scores of new plants had been set up over the last decade.

‘The region invested over 315 billion RUR in modernization, the labor productivity actually doubled; so did the region’s GDP which came to 670 billion RUR last year. As for the GDP structure, the share of small business rose from 11% to 25.1% and those of the building industry, the transportation, communication, and trade sectors increased as well. The area has always been and still is competitive. The most convincing evidence is that our foreign trade turnover soared to $11.7bn and our inter-regional turnover reached 429.5 billion RUR,’ he noted.

According to the Governor, the crisis hit the most industrially developed regions most. Zlatoust metallurgical plant’s output dropped by 45%, for instance, that of Chelyabinsk metallurgical plant plummeted by 75%.

‘The plummeting demand for metals has left blast furnaces, coking plants, and rolling mills idle. The world’s financial troubles have literally knocked the economy’s real sector senseless. This has affected the machine-building industry, the building and the energy sectors, and some SMEs,’ Sumin remarked.

Things, however, could have been much worse if the region’s government hadn’t taken emergency steps to alleviate the shock, the Governor said. A set of anti-crisis measures was developed and proposals were sent to the Russian Federation President and the Russian Government. Most of these proposals have already been approved. Then, 2.7 billion RUR were allocated from the region’s budget in November and December 2008 to support the small and medium-range enterprises and the agribusiness industry. The Governor reported that the bank were encouraged to support the real sector and offered over 50 billion RUR worth of loans to businesses over the last three months.

‘It’s difficult to say at the moment what the consequences (especially the ones to society) will look like, but we need to minimize them as much as we can; we must learn to work under trying circumstances. The crisis hasn’t destroyed what our citizens have created, but it did highlight the hidden problems we had and which must be solved at once,’ Sumin said.

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