Yet while the region's governor, Valery Shantsev, is the first to admit the difficulties of the current situation, there is, he said, a way out: new investment.
Speaking to a group of foreign and Russian businessmen on Tuesday, Shantsev emphasized the favorable conditions Nizhny Novgorod has been working to offer investors.
The regional administration has put a cap of 104 days on paperwork turnaround for investment projects, he said, and keeps property and land taxes at low 2.2 percent and 1.5 percent rates, respectively. The rates at which the region offers long-term land leases are four times cheaper than those in Moscow, the greater Moscow region or St. Petersburg, he said, speaking at an event sponsored by the American Chamber of Commerce.
Calling investors the lifeblood of Nizhny Novgorod ?€” a region that also specializes in aircraft building, IT and chemicals ?€” Shantsev said the area welcomed all kinds of investors with open arms.
"We don't distinguish between investors from Nizhny Novgorod, from Russia, from abroad, the U.S., Germany," he said.
"Investments have no nationality," he added with a chuckle.
Praising investments and business activity as the best ways to exit the crisis, Shantsev noted that Nizhny Novgorod's development depended on business relations. "If business activity grows, it means the region will grow. If business activity stagnates, the region won't develop," he said.
Nizhny Novgorod has already had to delay the construction of certain social development projects, such as schools and a clinic, Shantsev said, but has made it a priority to keep budget-provided salaries 25 percent higher those in other Volga River regions.
"We believe that if people receive money, they're going to go to the store, buy goods and that this will increase demand," he said.
During a question-and-answer session after Shantsev's speech, investors were quick to throw hardballs at the governor. A businessman in the chemicals industry questioned what would become of his sector, "one of the crisis's first victims," in Nizhny Novgorod, while another investor asked about the region's beleaguered auto industry.
Acknowledging that output at the GAZ car giant was down 18.5 percent in the first quarter compared to the same period a year earlier, Shantsev noted that March output was already up 79 percent month on month.
By July, the factory could break even, Shantsev predicted. By December it could pull in a profit.
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