The Official Karelia
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Results of 2002

Activity of the Government of the Republic of Karelia in 2002 was aimed to preserve positive dynamics of development of economy of the republic achieved in the previous years, and activization of investment activity.

In spite of the fact that in the real sector of economy the situation was aggravated with the constant rise in costs of goods and services of monopolies, and also adverse global conjuncture regarding basic kinds of production of Karelian export, it was possible to keep growth of the basic economic parameters and to execute the majority of predicted parameters.

In 2002 growth of manufacture of industrial output, real monetary incomes of the population including wages and pensions is provided, the volume of rendered paid services to the population and commodity circulation has increased. At the same time there was a reduction of agricultural production, cattle livestock, volumes of the foreign trade turnover, and financial condition of the enterprises has worsened.

In 2002 inflation has made 15.3% (compared to 18.3% in 2001) at predicted index of consumer prices of 114% prices in average have become 14.4% greater. Dynamics of prices in 2002 has been influence by the following factors: increase of the price level and tariffs of production and services of natural monopolies, significant rise in costs of mineral oil, and also growing demand of the population in process of growth of its real monetary incomes.

As a whole on the industry in 2002 growth of industrial production has made 102.2% at predicted 102%, growth of industrial outputs in ferrous metallurgy (106.9%), woodworking industry (102%), building materials' industry (102.8%), food-processing industry (135.4%) including fish industry (158.4%) has been achieved.

At the same time volumes of industrial production have decreased in the following branches: electric power industry (92.8%), engineering industry and metal working (96.4%), woodworking industry (94.2%), light industry (93.9%) and flour-and-cereals industry (55.8%). Due to continuation of increase of output by the industry in 2002 electricity consumption in the republic has become 1.1% greater in comparison with 2001, thus manufacture of the electric power by own power stations because of small water content of the rivers (88.1%) has decreased. Thus adequate provision with own electric power has made only 49.8%.

Tariffs in power industry considerably exceeded the common rate of rise in prices of manufacturers of industrial output. Within one year intense conditions in the sphere of electrosupply of the consumers related to non-payments for the consumed electric power was kept.

Conducting place in the structure of industrial production was kept by timber industry complex (more than 50%). Therefore position of all industry of the republic depends on results of work of this complex.

The index of physical volume of branches of timber industry complex in 2002 has made 98,4% compared to the similar period 2001. Lack of circulating assets, deterioration of conjuncture in some kinds of production of the timber complex, essential rise of costs of services of natural monopolies have resulted in restraints of rates of growth of volumes of manufacture and reduction of the profit obtained by export focused enterprises.

In logging industry the volume of manufacture for this year has made 94.2% compared to the level of 2001. Within this year the volume of wood hauling and manufacture of business wood (in the group of large and average enterprises) has become lower by 6%. Of 29 large and average logging enterprises 21 have lowered volumes of wood hauling.

The gap allowed by logging enterprises in the first quarter of 2002 owing to soft weather and because of strong colds in December in the fourth quarter has not allowed the enterprises to improve results of their work as a whole for the year. Increase of plywood production by the Open Company "Lahdenpohsky Bumex Plywood Combine" (by 7.8%) and escalating of volumes of flakeboards manufacture of Open Society "Karelia - Euroimex Flakeboards" have 2.7 times essentially affected growth of volumes of woodworking branch manufacture (102%).

At the same time, lack of own circulating assets for purchase of raw materials and reduction in demand on saw proluction were the basic reasons of reduction of wood sawing volumes by 9.7%. Because of absence of bolt timber in 2002 the Open Company "Kondopozhsky timber cutting enterprise" stood idle, Open Society "Ilyinsky timber mill" has 2.2 times reduced volumes of wood cutting.

In pulp and paper industry growth of manufacture in 2002 has made 100,3%. Manufacture of paper (102.1%) and paper bags (121%) has increased, while manufacture of cellulose commodity (98%), cardboard (76%) has decreased. Open Society "Kondopoga" worked at a level of 2001, Open Society "Segezhsky Cellulose Paper Plant" has increased release of commodity output in 2002. At the same time, due to absence of raw materials (cellulose), circulating assets and stop of paper-making machine for the reconstruction Open Company "Severoladozhsky Paper Combine Laskela" has by almost 2 times lowered volumes of paper manufacture and by on third has lowered release of commodity output. The mining complex is perspective and intensively developing sector of economy of the republic. The gain of physical volumes of manufacture in ferrous metallurgy compared to the level of 2001 has exceeded 1.5% stated in the forecast and on the results of 2002 has made 6.9%.

The basic manufacturer of ferrous metallurgy production is Open Society "Karelsky Okatysh (Karelia iron-ore pellets)", it makes each fourth ton of Russian iron-ore pellets. About 40% of volume of iron-ore pellets the enterprise exports to distant foreign countries. In total in 2002 the enterprise has produced 6947 thousand tons of iron-ore pellets, which makes 105.3%.

The enterprise managed to keep the basic positions on the foreign market and even to increase realization of production on the home market. The factory on manufacture emulsion explosive is commissioned, which will considerably allow to reduce expenses for realization of explosive works.

In 2002 enterprises of the mining complex of the republic for have produced 4,4 million cubic meters of macadam and gravel of natural stones and sand-gravel mixtures (106% compared to 2001). In July 2002 the new enterprise for macadam manufacture Open company "Karelakmen" (Veppskaya National volost) which productivity is 250 thousand cubic meters of macadam per year is put into operation. The state of affairs in engineering industry of the republic substantially depends on orders of the enterprises of the timber industry complex. The following enterprises of engineering industry of the republic are focused on orders of the wood complex: Open Society "Onego Tractor Plant", Joint-Stock Company "Repair and Engineering Works", and Open Society "Stankozavod".

In 2002 the index of physical volume of industrial production in engineering industry has made 96.4%. At the same time, by the end of the year gap of volumes of manufacture observed in the beginning of year (66.9%) was reduced due to growth of output of Open Society "Onego Tractor Plant", Open Society "Stankozavod - DeKO", and Joint-Stock Company "Petrozavodskmash".

As a result of measures undertaken by the new management of Open Society "Onego Tractor Plant" the enterprise has produced 662 tractors compared to 655 in 2001. Organization of dealer network and development of more effective circuits of sales, flexible system of calculations (short-term leasing, sale for saw-timbers and balances etc.) have allowed the factory to expand its commodity market of production. The Joint-Stock Company "Petrozavodskmash" in 2002 has increased the volume of manufacture by 102.5% in comparision to the level of 2001, manufacture of chemical equipment has been increased, although reduction of volumes of paper-making equipment manufacture (87.5%) and moulding made to order (73.8%) is admitted.

Rates of growth of manufacture in the food-processing industry within the past few years were higher in comparison with average on the industry as a whole. At the enterprises of branch work on escalating outputs was carried out due to introduction of new technologies, development of new kinds of production and modernisation of the enterprises. On results of 2002 the physical volume of industrial production in the food-processing industry has exceeded the level of 2001 by 16.2%, basically due to the enterprises of the fishing industry.

In 2002 fish and seafoods catch has increased by 14.8% in comparison to 2001, release of commodity food production has become greater by 25.4%.

Almost two thirds of fish production it is made now by small enterprises. The gain of volume of manufacture of alcoholic production has been achieved due to increase of manufacture at the branch of the Federal State Unitary Enterprise Petrozavodsky distillery "Petrovsky" (127%).

At the same time, Open Company "Prionezhsky distillery" practically has twice lowered volumes of production to the level of the last year. From the beginning of year industrial stay of the line of pouring at the enterprise has made 132 days.

Investments in the fixed capital in 2002 have made 10,5 billion roubles or 125% to the level of the last year and was allocated to the following branches: cellulose-paper industry, logging industry, woodworking industry (Open Society "Segezhabumprom", Open Society "Kondopoga", Medvezhiegorsky forestry), railway transport, highway facilities, pipelines, housing and communal services, and communication. Thus, foreign investments received by enterprises and organizations have made $14.6 million (in the view of the rouble investments counted in US dollars) and were allocated basically to timber, woodworking and pulp and paper industry (46%), trade (25.7%) and the food-processing industry (8.4%), public health services, physical training and social security (4.7%).

In 2002 100 percents from the stipulated limit on performance of the address investment program have been financed from the republican budget. The significant part of means is directed on financing of objects within the framework of preparation for the 300-th anniversary of Petrozavodsk (23%), on development of municipal services (16%), on construction of objects of public health services (22.4%), and education (19.3%).

About 1000 firms of the Republic of Karelia carried out the foreign trade operations in 2002. Volume of foreign trade turnover of the goods has made $739,3 million, which is 6.3% less than in 2001. Export makes 80% of foreign trade turnover. In 2002 export of goods has made $591 million, which is 8.6% less than in 2001. The most essential influence on reduction of export as a whole on the republic was rendered by depreciation of export deliveries of the newprint in comparison with 2001 (by 23.5%), basically because of reduction of the average price of export (by 20.8%), that is caused by deterioration of conjuncture of the world market which has resulted in reduction of external demand.

On results of 2002 as a whole on the republic it has been collected 8% more tax payments in budgets of all levels than in 2001. From the point of view of branches of economy the greatest densities in the volume of receipts is occupied by enterprises of timber, woodwoking, and pulp and paper industries (13% of total amount of receipts), electric power industry (9%), transport (11%), trade and catering (9%), building branch (8%), ferrous metallurgy (6%) and enterprises of the food-processing industry (6%).

In 2002 sufficiently great growth of real monetary incomes was observed (incomes corrected by the index of consumer prices). Within the period from January to November real available monetary incomes of the population have grown by 19.2% compared to the similar period of 2001, at the increase of costs of goods and services by 14.4%.

In turn, incomes of the population define development of consumer market of the republic. Stability of growth of commodity circulation testifies to adaptation of managing subjects to conditions of the market, growth of competitiveness of domestic goods and services including local ones. In 2002 volume of retail commodity circulation in the Republic of Karelia has made 17,3 billion roubles (120%). In 2002 the level of officially registered unemployment has made 2.8% to economically active population (compared to 2.9% in 2001).

Technical support
Created: February 4, 2003. Last updated: February 4, 2003.
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