Saint Petersburg is Russia’s most important economic centre. The city’s economy, mostly relying on the industry and consumer market, shows consistently strong performance indicators as compared to other Russian regions.
According to Saint Petersburg Finance Committee, the city’s budget revenue in 2015 was overperformed by 9.5% to make RUB 439,219,000,000 against the approved RUB 401,146,000,000. In January–February 2016, Saint Petersburg’s budget received RUB 47.0 million of income or 109.6% y-o-y.
Own budget income of Saint Petersburg (tax and other revenues) in 2015 equalled 94.5% of the total income, with a 5.5% share of transfers from the federal budget.
The largest sources of the city’s budget income are personal income tax (41% of the total income) and corporate income tax (25%).
Following 2015 results, Saint Petersburg’s industrial production index was 92.7% as compared to 2014. The volume of shipped products in the manufacturing industry kept growing throughout the year to make 5.5% following the year’s results. Turnover of the city-based organisations increased by 9.4% in 2015 vs. 2014.
In Q1 2016, industrial output and retail sales were also rising. Industrial production index for the period went up to 101.8% y-o-y driven both by high performance maintained by the food industry and improved performance of the machine and equipment production sector.
Throughout 2015, city-based organisations maintained their financial stability. In January–November, the balanced financial results of Saint Petersburg’s organisations increased more than 1.5-fold against January–November 2014 to make RUB 525 billion following 11 months of 2015. In 2015, the share of profitable organisations in the total number of the city’s business entities grew steadily to reach 79% in 11 months. Losses of unprofitable business entities in 11 months dropped by 10%.
Investments in Saint Petersburg’s fixed capital in 2015 were RUB 521.3 billion, while direct foreign investments in the city’s economy exceeded USD 5.3 billion in nine months of 2015.
In 2015, the foreign trade turnover reached USD 33.1 billion. The share of exports in the foreign trade stood at 41.8%, and the share of imports was 58.2%.
To boost its economic growth, Saint Petersburg continues to run a Programme of Priority Measures to Ensure Sustainable Economic Growth and Social Stability of Saint Petersburg in 2016–2017, approved by the city Government. These measures are focused on the performance of earlier social commitments to Saint Petersburg citizens, targeted support of city enterprises, promotion of business activity, encouragement of investments in the city economy and improvement of the efficiency of budgetary expenditures.
Saint Petersburg is a largest scientific and education centre of Russia, and building up-to-date production facilities is a top priority of the city’s policy. Sponsored by the Saint Petersburg Government, the city set up and actively develops a modern innovation support infrastructure: St Petersburg Centre for Entrepreneurship Development and Support, St Petersburg Industrial Project Support Directorate , St Petersburg Chamber of Commerce and Industry, St Petersburg Business Development Fund, St Petersburg Technology Park, Cluster Development Centre, and Ingria Business Incubator.
At the same time, the key strategic resource of Saint Petersburg is a significant number of highly educated and skilled specialists in all sectors of economy. The city continuously creates new incentives to engage skilled labour.
Also, to meet the labour market needs, Saint Petersburg has recently increased admissions of students to vocational institutions to be trained in professions related to metalwork, shipbuilding, construction, transport, and utilities. The number of people engaged in the city economy is 2,805.5 or about 55% of the total population. According to all-Russia population census, the share of specialists of productive age with higher education engaged in Saint Petersburg’s economy is 38%, and the share of specialists with secondary vocational education is 32%, which speaks for high qualification of human resources.
In 2015, the Association of Innovative Regions of Russia ranked Saint Petersburg second, falling slightly behind Moscow. The ranking was based on 23 indices in the following areas: research and development, innovation, social and economic environment.
Saint Petersburg is the cultural capital and the only Russian city with the annual number of tourists exceeding the number of citizens. The 5 million megacity is visited by more than 6 million tourists every year. According to statistics, 6.5 million Russian and foreign tourists came to Saint Petersburg in 2015. In addition to the traditional cultural and educational tourism, the business tourism segment, including congress and exhibition tourism and cruise tourism (over 12% annual growth rate), is quickly gaining momentum.
Tourist flow in 2015 increased due to guests from Asia, primarily South Korea. Tourists from Germany, Italy, and the neighbouring Finland are also increasingly interested in the “North Capital’s” attractions. At the same time, the city welcomed over three million of Russian guests in 2015. Most tourists came from the Central Russia, Southern and Ural Federal Districts. In the previous year, Saint Petersburg has also grown popular among the Crimeans.
Actively promoted by the Saint Petersburg Government, tourism is one of the most attractive sectors for investment. On the threshold of the 2018 FIFA World Cup, Saint Petersburg’s top priority is hotel infrastructure development.
In early 2016, the city law On Strategic Investment Projects, Strategic Investors and Strategic Partners of St Petersburg was amended to reduce the aggregate threshold for investments in hotel infrastructure development 10-fold or down to RUB 1.5 billion for a project to be assigned a strategic status.
In late 2015, Saint Petersburg accounted for 141 hotels with a total of 20,000 rooms (excluding small accommodation facilities: hostels and mini hotels). Over the last five years, 25 hotels were added with a total of 5,400 rooms.
In line with the Strategy of Economic and Social Development of St Petersburg, the hotel capacity will reach 45,000 rooms by 2030, and the number of guests coming to the city for different reasons will rise to 10 million per year.
Occupancy rate of Saint Petersburg’s hotels in the high season of 2015 was 80%–90%. The average price per night increased during the year almost in all market segments. Therefore, Saint Petersburg is definitely a perfect choice for investment in hotel facilities construction projects.
Palaces and parks around Saint Petersburg, such as in Pushkin (Tsarskoye Selo), Pavlovsk, Peterhof, and Oranienbaum (Lomonosov), enjoy worldwide popularity. One citizen on an average accounts for 56 sq m of plantings – much more than in other Russian multi-million cities.
In the Karelian Isthmus, along the coast of the Gulf of Finland, a Resort area is located that has for many decades hosted recreational tourism facilities.
Every year, Saint Petersburg organises about 100 international festivals, competitions, and traditional festive events.
Saint Petersburg is Russia’s leader in hosting exhibitions, international congresses, and conferences. The city has about 250 scientific institutions and over 50 universities, which organise national and international annual scientific workshops and conferences.
A large number of exhibitions, fairs, and festivals form a solid base for business tourism development in Saint Petersburg.
In addition to traditional arts, Saint Petersburg features an active development of creative industries. The city is rapidly becoming a centre of art shops and independent art spaces.
Saint Petersburg guests may choose to take a river and canal tour or a roof tour, or see such unique cultural attractions as the Museum of Soviet Arcade Machines, the Metro Museum or the Water Museum. Very soon the list of extraordinary museums may include an Underwater Archeology Museum to be built in the dry dock of Peter I in Kronstadt.
As soon as August 2016, New Holland Island, a unique cultural site admired by all citizens, will re-open in the Admiralteysky District of Saint Petersburg.
With its historical centre and palace and park ensembles Saint Petersburg is the first site in Russia on the UNESCO World Heritage List.
The city has 8,500 cultural heritage sites, of which 4,200 of federal importance – almost 10% of all Russian monuments protected by the Government. That is why Saint Petersburg is called an open air museum.
Saint Petersburg has over 80 theatres. The Mariinsky Theatre, Russia’s and world’s famous opera and ballet theatre, was built in 1783. In 2013, the Mariinsky opened a second stage to enhance its creative potential.
Saint Petersburg has over 200 public libraries. The National Library of Russia, one of the world’s largest libraries, keeps about 35 million books.
Saint Petersburg has about one hundred public and hundreds of private museums and galleries. The Hermitage Museum, the most famous one, accounts for about three million of the world’s cultural artefacts and works of art, including masterpieces by Pablo Picasso, Leonardo da Vinci, Rembrandt, Raphael, and many others.
Saint Petersburg guarantees its investors transparent rules of business, equal access to land, transport, and energy resources. Anyone who wants to contribute to the city development may enjoy having support that enables efficient, sustainable, and safe business. The Saint Petersburg Government, to the extent of its competence, guarantees to adopt no laws that may deteriorate the investor position.
Saint Petersburg has set up and continuously improves an investment support framework, seeking to minimise administrative barriers and simplify procedures for issuing construction permits and registering ownership.
Saint Petersburg was the first Russian region to adopt a law governing public-private partnerships in 2006. It will be aligned with the Federal Law effective as from 1 January 2016.
A special focus of the Saint Petersburg Government is on foreign investment; in 2016 it is expected to approve and adopt foreign investor protection measures.
Saint Petersburg offers a preference scheme to investors. The scheme is regularly updated and supplemented with new measures depending on business community needs and macroeconomic developments.
One of the key investment support vehicles is assigning a project that has social and economic importance for the city the status of a Saint Petersburg Strategic Investment project, implying the following benefits:
Saint Petersburg also offers all investors a set of tax incentives. In particular, income tax may be reduced to 13.5%, and property tax to 0% for a five-year period.
Saint Petersburg has a Special Economic Zone (SEZ) with a perfect environment for growth of business. The SEZ is located on two sites: Neudorf in Strelna (18.9 ha) and Novo-Orlovskaya (110.4 ha) in the Primorsky District. SEZ residents enjoy tax and customs benefits, a simplified procedure for land plot provision and a privileged rental rate.