Manufacturing sector of the economy of North-West Russia: A year of functioning under the conditions of strengthening sanctions

Abstract

Aim. To study the peculiarities and problems of adaptation of the production sector of the economy of North-West Russia to the strengthening of sanctions pressure.Tasks. To assess the changes in the performance of enterprises of the production sector of the economy of the North-West of Russia in modern economic conditions; to identify the factors that hinder the development of production; to analyze the features of the transformation of supply chains and adaptation of enterprises to the strengthening of sanctions; to assess the financial condition and investment activity of enterprises; to characterize the degree of approval of the managers of enterprises of the implemented economic policy and show the expected directions of state policy.Methods. The methodological and informational basis of the study was provided by questionnaire surveys conducted by the Center for Structural Research and Forecasting of Territorial Development of the Vologda Scientific Center of the Russian Academy of Sciences (VolNTs RAS) in April-May 2022 and 2023.Results. According to official statistics, the deterioration of the economic situation in the North-West of Russia is confirmed by the results of surveys of managers of enterprises in the production sector of the economy. The main factors restraining the development of production are insufficient demand in the domestic market, uncertainty of the economic situation, high prices for production resources and the level of taxation. Due to the deep integration of the economy of the north-west of the country with the economies of unfriendly countries, the transformation of supply chains due to sanctions has affected the majority of enterprises in the region. The change in the configuration of chains is manifested primarily in their spatial reorientation and simplification of interaction directions. The enterprises of the Northwestern Federal District (NWFD) have a significant potential for the realization of the course on the complication of the national economy and strengthening the use of the potential of the domestic market. However, the transition to this trajectory is constrained by the lack of investment resources. The development of the production sector of the economy, according to managers of enterprises, will be promoted by reducing the tax burden, limiting production inflation, supporting domestic solvent demand, as well as strengthening the fight against bureaucracy and corruption.Conclusions. The complication of the geopolitical situation has significantly changed the conditions of functioning of the production sector of the economy of the North-West of Russia, led to the deterioration of the financial performance of enterprises, the decline in some performance indicators of their organizations. Active adaptation activities of enterprises (optimization of production processes, reorientation to new suppliers and consumers, transformation of interaction directions, etc.) with the assistance of the authorities contributed to a significant leveling of the negative consequences of the sanctions pressure and transition to a new development trajectory — to the complication of the national economy and increased use of the domestic market potential.