The Current Economy of the Crimea

Three years have passed since Russia was annexed by Russia, and it is interesting to see how the Crimean economy has responded to this political change. Obviously change can bring good and bad things and this we hope to clarify in this blog.

The Bridge of Hope

An eleven-mile bridge has almost completed its construction between the Krasnodar region of Russia to the city of Kerch in Crimea. The bridge will act both as a road and rail link spanning the Kerch Strait which is situated between the Sea of Azov and the Black Sea. It one way the bridge is the final step of the political annexation, but in another it will be a major channel for commerce.

Investment

Moscow is investing heavily in infrastructure on the Crimean Peninsula. Hospitals are being modernized, roads rebuilt, bridges constructed and trade with Russia growing. However, conversely there has been little or no trade with the Ukraine since the annexation. The fishing industry in particular has greatly suffered, Ukraine has stopped buying Crimean fish. Russia has not taken up the slack as they feel this commodity is too expensive, as ferries are used to transport the fish to Russia. Perhaps this will change on the completion of the bridge, and cheaper rail transport made available.

Wine

Crimean wine has long been popular with Russians and they have continued to buy it by the barrel, in 2014 the Crimean wine industry was booming. But it must be noted that this is trailing off and the initial euphoria from Russia is declining again down to price. The crux of all the present woes of the Crimean trade all comes down to the same thing, the cost of transportation. This is the same for, food, wine, gasoline and importing or exporting from Russia depends on expensive ferries.

The Future

Russia are adamant that the future news for the Crimean economy is rosy, tourism rose by over 20 percent during 2016 to over five and a half million people. GDP also rose by eight and a half percent. The average Crimean wage and income has increased year on year since 2013, although retail sales have been low, over seven percent on last year’s figures. Property has been a big winner since the annexation, many Russian officials have been buying accommodation in Sevastopol and surrounding areas to relocate their families. And the popular seaside resort of Yalta has many luxury apartments and houses that are pitched at the higher end of the market, right at wealthy Russians.

The tourist industry is still in somewhat of a limbo land, at the moment it is pretty good but how long it lasts is uncertain. It was far easier for Ukrainians to get to the Crimea, but Russian tourists have to fly or are forced to take packed boats. The Crimean economy is at the moment something of an enigma, in some respects it is very healthy indeed, but in others it is falling behind. There is no doubt many people have benefited from the annexation by Russia, but traditional industries such as fishing have greatly suffered.

Posted in: Crimea, Economy

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