Economic Consequences of COVID-19 for Russia’s Regions

Abstract

The paper studies economic consequences of restrictive measures caused by COVID-19 and the degree of their spatial heterogeneity in Russia. We used the monitoring data of socio-economic situation in Russian regions to build an indicator of economic activity in the regions in April-May 2020. The estimates show that economic activity in the country after introduction of restrictions decreased by almost 25%, the bans impacted on the regions in various degrees with difference being more than two times. The tested hypotheses were the following: developed regions, large cities and small businesses would suffer more large cities and small businesses would suffer more. The impact of reduced demand on global commodity markets was considered. The significance of factors was determined based on regression analysis. Estimates did not confirm most assumptions. The urban economy proved to be more resilient to restrictive measures than the national average. Small business, despite concerns, proved to be a factor supporting the economy of the regions. It was confirmed that more developed regions, all other things being equal, suffered more. However, this influence was offset by other factors, and the expected trend towards spatial convergence was not observed.