Rating of Russian agglomerations in terms of resilience to the crisis 2020
Business, population and budgets of the most developed urban agglomerations of Russia are at risk of suffering from the coronavirus significantly more than their less fortunate counterparts.
• during the crises of 2008 and 2014. MACON consultants constantly monitored the situation in the real estate markets of the largest Russian cities. The dynamics of market indicators has always been different. This depended on the level of competition and the degree of saturation of the market, prices and the income level of the population. At the same time, past crises were more of a macroeconomic nature, while problems in 2020, in addition to the macro component (falling oil prices, volatility of the national currency, etc.), have a pronounced local component (different regimes and timing of quarantine measures due to the pandemic, the heterogeneity of regional measures to support business and the population). The degree of reaction of the markets of Russian cities to the observed crisis phenomena will also have a greater amplitude than usual.
One of the main influences on the degree of penetration of crisis phenomena into the largest cities of Russia will be exerted by the structure of their economy, since the degree of damage from quarantine and other measures to combat coronavirus infection on different industries will be heterogeneous. To analyze these differences, we used Fund "Institute of Urban Economics" on the structure of the economy of Russian cities and the volume of gross urban product per capita.
• Next, MACON consultants expertly assigned a weight to each of the city's industries (Brookings Institution classification), depending on its vulnerability, speed of recovery, and predicted impacts. Coefficient "1" means the greatest stability / no impact, "0" – the least / complete or partial temporary liquidation of the industry.
Local/non-market services. Coefficient – 1.
• The most stable segment, which includes state and municipal services, education, healthcare, social support for the population and other similar services. It is assumed that the volume of the sector will remain or increase due to additional indexation or one-time/permanent support measures.
Manufacturing industry. The coefficient is 0,8.
• Despite the possible decline in output and employment, the sector has sufficient stability. Strict quarantine measures often do not apply to him. Since such organizations, as a rule, belong to large businesses, they, on the one hand, are subject to additional supervision measures, on the other hand, the greatest support will be provided both directly financially and through government orders, tax incentives, subsidizing interest rates and facilitating access to debt financing.
Public utilities. The coefficient is 0,8.
Branch maintains basic stability in a crisis. A negative impact is exerted by a decrease in business activity, which is offset by an increase in the consumption of industry services by individuals. However, the difference in tariffs for individuals and commercial organizations will have a negative impact on revenues.
Extraction of raw materials. The coefficient is 0,7.
• In general, the sector includes mining, agriculture, forestry, hunting, and fishing. The impact is more significant, the dynamics of commodity prices has a negative trend. Nevertheless, given the large volume of employment, the traditional volatility in this type of market, the non-stop nature of many extractive industries, it is most likely that work will continue and that basic employment will be maintained in the medium term (up to 6-7 months).
Construction. The coefficient is 0,5.
• A significant negative coefficient is associated with the high dependence of the industry on any macroeconomic fluctuations, as well as with the multiplier effect, due to which even a slight reduction in construction volumes causes significant changes in related industries. At the same time, the backbone nature of the industry guarantees it a certain degree of state support and, consequently, stability.
Transport. The coefficient is 0,5.
• A significant reduction in the sector is associated with both direct factors (the almost complete elimination of air traffic, a reduction in railway transportation, often a ban on movement within the city, between municipalities and subjects of the Federation), and indirect factors (a decrease in the level of wholesale and retail trade). At the same time, the need to ensure commodity logistics guarantees the preservation of industry volumes at the level of acceptable values.
Business and finance. The coefficient is 0,4.
• One of the city's most vulnerable industries, including financial services, insurance, real estate and new technology. Each of them is characterized by both a significant decrease in business activity and a decrease in physical access to such services.
Trade and tourism. The coefficient is 0,1.
• The segment of retail and wholesale, catering, hotel and conference services is the most affected industry. The assessment is aggravated by low resilience, ease of liquidation procedures, lack of access to credit resources and insufficient level of state support.
• Based on the above factors, MACON consultants have compiled a rating of Russian urban agglomerations in terms of potential resistance to crisis phenomena:
Show the greatest stability Perm, Chelyabinsk and Saratov agglomerations. In these cities, 60% or more of the economy is in 3 basic industries: local municipal/state non-market services, manufacturing, and utilities. These industries are either fully controlled by the state/municipal authorities, or have a significant systemic/city-forming character, which allows them to receive priority benefits and preferences that help maintain employment and production.
The least resistant to crisis phenomena were Moscow, St. Petersburg, Krasnodar, Yekaterinburg agglomerations. The share of the three basic sectors (government/industry/municipal), in contrast to the leaders of the rating, is significantly lower here: 44,4% versus 62,8%. However, the share of the "business and finance" and "trade and tourism" sectors, which are the most vulnerable in the current situation, is significantly higher (41,5% versus 22,7%). And if Moscow and St. Petersburg, due to objectively wider financial opportunities, can neutralize these factors with active financial, tax and other support for the population and business, then non-capital cities do not have such a resource.
• Correlation analysis of the dependence of the rating results on the level of gross urban product per capita shows its significantly inversely proportional nature: the poorer the city, the more stable it is in the current crisis. The paradox of the situation lies in the fact that Russian agglomerations, which before the current crisis were actively developing as modern megacities with a large share of financial and business services, a developed construction market and IT technologies, today risk finding themselves in a much more difficult situation than municipalities whose economic structure is characteristic of the "pre-digital" era. The latter will probably receive both a significant part of the budget subsidies and the confidence that the course chosen earlier was exclusively correct.