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Economic development of the Republic of Karelia

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General characteristics of social-economic situation
in the Republic of Karelia

Accumulated potential of positive tendencies, rather favorable foreign economic situation, domestic social-economic stability and the measuments taken by the Government enabled to keep positive dynamics of most economic factors. .

Though the rates of production were slowed down in comparison with 1999, the growth of production was provided in 2000. the growth was marked in the following areas: agricultural production, investment, foreign trade turnover. The inflation and unemployment slackened.

The budget and financial policy of the Government allowed to increase the share of monetary means in mutual settlements, to form own enterprises means, to forward them for reconstruction.

The growth of economic factors encouraged the increase of budget incomings. This positive result helped solve the social problems in the republic including not only current expenses, but also capital costs. Last year 4 secondary schools, a kindergarten, the House of Children Creativity in Kostomuksha, a children musical school in Kem were constructed and put to operation. The expenses for medical equipment and hospital construction were doubled. The invalids of war and labor were presented by the "Oka" cars. The salary debt was paid off. The pensions are not delayed any more. The tendency of retail turnover and the level of real income of population has been growing for the first time in recent years.

At the same time, the positive tendencies are not stable yet. The signs of economic activity being slowed down in last months show that the potential of positive influence of post-crisis factors has exhausted itself.

External and internal negative factors has influenced social-economic development of the Republic of Karelia. The external factors are as follows: the prices rise in energy supply, fuel and transportation, outpacing growth of wholesale prices in industry, increasing customs tax for timber, paper, iron granules. It leads to profit and enterprise profitability decrease.

To internal factors one might refer lack of the large capital to renovate fixed assets, insufficient bank contribution to investment in the real sectors of economy, deficiency of qualified management staff.

As a result of the above listed factors, the negative tendencies took place. They could be found in decrease of profit share in the volume of produced products and worsening of financial position of enterprises in the fourth quarter of the last year. The credit and debit ineptness has increased in comparison with the beginning of the year. The salary ineptness was not paid off at the enterprises.

Slackening in the rates of growth of the economy in the second half of the year challenges the Government to search for new resources to continue encouraging of the production rates.

To accomplish this goal, we have to increase production potential efficiency and achieve higher productivity on the account of new technologies. To solve the problem, we need to renovate manufacturing, and it is possible only with investment attraction and efficient control of natural resources utilizing.


The report of the Head of the Government of the Republic of Karelia "On the situation in the republic, governmental programs accomplishment, domestic policy and foreign relations" (summing up 2000) presented at the sitting of the Legislative Assembly of the Republic of Karelia on March 14, 2001. (in Russian, in format *.rtf (Zip130Kb))

Russia:Export-Import

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