Industry holds dominant share in the economy
The share of GRP for transport, trade, and other services is slowly increasing and should grow further in the coming years, therefore improving the economic profile of the krai. Manufacturing currently accounts for 83.78% of industrial output, followed by electrical energy production (10.87%) and mining (5.35%). Planned extraction of gas and oil, and the construction of new power stations, will gradually reshape the industrial landscape in favor of mining and energy production, the shares of which are expected to grow to 30.9% and 15.9%, respectively, by 2015. Metal production currently accounts for a high 62.7% of industrial output and is represented by nickel, aluminum, rare and precious metals, and copper. These are mainly export-oriented products, exposing the krai’s revenues to fluctuations in global markets. In 2006, the five largest metal companies generated 51% of tax revenues, with Nornickel contributing an overwhelming share. The company accounts for more than 18% of world nickel production, about 2.5% of copper, 50% of palladium, and about 13% of platinum. The krai is very dependent on Nornickel’s financial strength and its policy on reporting and allocating profits. To date, relations with the company have proved favorable for the krai and are formalized in a special mutual medium-term agreement. Although this adds an element of predictability to the tax proceeds, risks of potential changes in the corporate policy remain in the medium term. The krai’s employment structure – led by manufacturing with 15% - shows less concentration. Krasnoyarsk’s wealth level is moderately low by international standards. Although its GRP per capita indicators are sound compared with Russian peers, the quality of major budget services such as health care, transportation, and gas supply requires significant improvement. … and progress of big projects will determine diversification The krai’s GRP growth – averaging 4.7% in 2004-2007 – was lower than the national average of 6.5% for the same period, mainly because growth is primarily dependent on a mature metal production sector. To date, investment is low compared with other Russian regions, and foreign investment is negligible, given the strategic importance of nickel and gold for the national economy. The basic sectors will account for the bulk of GRP in the future, but growth prospects will depend on the results of major investment projects – in energy and metallurgy, oil extraction, and pulp and paper production. The infrastructure projects planned over the next few years will provide a fillip to the economy. The proposals for the above-mentioned energy projects, along with construction of transportation and gasification networks, development of the Krasnoyarsk city transportation hub, and other projects are worked out by the krai and submitted to the Federal Investment Fund for medium-term financing. Estimated financing will total RUR54 billion. www.standardandpoors.com
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