Saint Petersburg, the second-largest city in Russia, stands as a prominent hub of industrial, scientific, and cultural significance. Encompassing an area of 85,300 km squared, including both the city itself and the Leningrad region, it boasted a population of 7.4 million in 2022, representing 5.2% of Russia’s total population. This figure is expected to hold steady through 2030. In 2022, the population density was recorded at 87 people/km squared, with the majority being of working age (66.5%), followed by the young (16.0%) and the elderly (17.5%). The total dependency ratio saw an increase from 44.7% in 2018 to 50.3% in 2022, projected to rise to 54.4% by 2030.

Economically, the Saint Petersburg metropolitan area experienced a contraction of 2.2% in real terms in 2022, down from a 4.6% growth in 2021. However, its nominal GDP saw an increase, reaching RUB 10.0 trillion ($146.4 billion) in 2022, up from RUB 8.9 trillion ($120.6 billion) the previous year. By 2030, the area’s nominal GDP is forecasted to surge to RUB 14.0 trillion ($174.5 billion), with GDP per capita expected to climb from RUB 1.3 million ($19,672) in 2022 to RUB 1.9 million ($23,448) by 2030. The tertiary sector dominated the Gross Value Added (GVA) with an 82.4% share, followed by the secondary (17.5%) and primary (0.1%) sectors.

The job market in 2022 remained static, with unemployment marginally increasing to 3.0% from 2.9% in 2021. Employment and labor force numbers slightly rose to 3.6 million and 3.7 million, respectively, with unemployment expected to reach 3.1% by 2030. Pulkovo International Airport (LED), located 23km from the city center, served as a major gateway, connecting Saint Petersburg to over 163 global destinations via 72 airlines and handling 18.1 million passengers in 2022, marking a 0.6% increase from the previous year.

Tourism has been a vital part of Saint Petersburg’s appeal, earning it the “World’s Leading Cultural City Destination” title from the World Travel Awards for six consecutive years, surpassing cities like Paris, London, and New York. In 2022, the city attracted five million tourists, an 80.8% increase from 2.8 million in 2021, with domestic tourists making up 94.1% of the total. The number of domestic tourists surged by 82.9% to 4.7 million, while international tourists increased by 52.1% to 296,283. The first half of 2023 saw 2.3 million visitors, including 133,778 foreign tourists, driven mainly by domestic tourism and a gradual return of international tourists from various countries, including an anticipated influx from China.

Economy

Saint Petersburg, a pivotal economic, scientific, and cultural nucleus within Russia, contributes significantly to the nation’s GDP, with a 6.6% share. Dominated by industrial production, particularly in heavy and power engineering, the metropolitan area also sees substantial economic activity from tourism, trade, real estate, transportation, communications, and construction sectors. However, 2022 witnessed a 2.2% decline in the area’s GDP in real terms, largely due to the repercussions of the Ukraine invasion and subsequent mobilization efforts within Russia. This period saw diminished investment support, a downturn in real estate demand, a contraction in the advertising market, and notable setbacks in the automotive sector due to major manufacturers exiting and import restrictions on electronics and spare parts. The mobilization and emigration of skilled labor, especially from the IT sector, led to significant workforce shortages, affecting various industries and potentially influencing future employment opportunities.

Despite these challenges, the Saint Petersburg metropolitan area’s economy is projected to grow at an average annual rate of 0.6% from 2023 to 2030, slightly lagging behind Moscow and Novosibirsk’s metropolitan areas. The nominal GDP increased to RUB 10.0 trillion ($146.4 billion) in 2022, up from RUB 8.9 trillion ($120.6 billion) in 2021, with forecasts predicting a rise to RUB 14.0 trillion ($174.5 billion) by 2030. In terms of GDP per capita, Saint Petersburg stands at RUB 1.3 million ($19,672) in 2022, positioned between Moscow and Novosibirsk metropolitan areas, with expectations to reach RUB 1.9 million ($23,448) by 2030.

The tertiary sector dominates the area’s economy, contributing 82.3% to the total Gross Value Added (GVA) in 2022, with significant inputs from wholesale/retail trade, hotels and restaurants, and transportation and information services. The unemployment rate marginally increased to 2.97% in 2022, with projections indicating a slight uptick to 3.14% by 2030. Employment dynamics reflect minimal growth in 2023, with a forecasted decline in both labor force and employment from 2024 onwards. By 2030, the services sector is expected to constitute 73.3% of total employment, underscoring the region’s economic reliance on service-oriented industries amidst evolving economic landscapes and challenges.

Business

Saint Petersburg, ranked as the third-largest city in Europe after Moscow and London, stands out as Russia’s premier economic and scientific hub. The city’s allure for investors is bolstered by its strategic location as a crossroads between Scandinavia, Europe, and the Baltics, coupled with a stable economy and a wealth of highly qualified human capital.

Central to Saint Petersburg’s innovation landscape are its two Special Economic Zones (SEZs), Neudorf and Novoorlovskaya, spanning a combined area of 1.8 million squared meters. These zones are fostering advancements in key sectors such as pharmaceuticals, biotechnology, ICT, instrumentation, and microelectronics, hosting 57 companies with a total revenue exceeding RUB 280 billion ($3.8 billion) in 2021. Notable investors include Biocad, Pharmasyntez-Nord, VERTEX, GEROPHARM, and MCNES Polyurethane, underscoring the SEZs’ pivotal role in the region’s economic vitality.

Further enhancing this economic landscape, the SEZ’s Supervisory Board in February 2021 endorsed a long-term development plan aiming to bolster SEZ operations by 2031. This initiative seeks to catalyze increased infrastructural investments by residents, projected to surpass state investments with an estimated RUB 112.1 billion ($164.2 million).

Saint Petersburg’s business environment is enriched by the presence of over 1,000 foreign entities, including global giants like Toyota, Nissan, Hyundai, Coca-Cola, PepsiCo, Deloitte, Oracle, and Dell Technologies, alongside headquarters of major Russian firms such as Gazprom Neft, Sovcomflot, Sibur Holding, Polymetal, and LSR Group.

The city’s burgeoning startup ecosystem, supported by accelerators like iDealMachine, 404hub, SUMIT, Future Technologies, and IIDF, demonstrates a dynamic engagement between private, state-owned enterprises and startups. Prominent startups like Cross Border Solutions, Webtalk, SavvyCard, SKUxchange, Code-X, TAO Connect, and Simply Reliable, Inc. signify the vibrancy of Saint Petersburg’s innovative spirit.

Taxation plays a pivotal role in the corporate landscape, with a 20% tax on undistributed profits for corporations and a 13% individual tax rate. The office market in Saint Petersburg has seen increased activity, yet faces a scarcity of high-quality office spaces. Despite this, rental rates for Class A and B business centers have largely stabilized since late 2022. The first half of 2023 observed a 2.5% decline in weighted average rental prices for Class A properties to RUB 1,982.5 ($25.8)/squared meter/month, while Class B properties experienced a modest 0.8% uptick to RUB 1,344.5 ($17.5)/ squared meter/month.