Page 17 - UKRRptFeb19

Like Lukashenko, Putin has earned a lot of credit with his people for bringing down the despair index since he took over in 2000. Under former president Boris Yeltsin poverty got up to 60% and hyperinflation topped 2000% at its worst; Russia’s despair index was ten-times higher than those in Central Europe during the nadir in the 90s.
Putin’s administration saw income levels increase the early 2000s and drove down the poverty rate from 29% in 2000 to 10.7% in 2012, its best result. Unfortunately, the income levels didn’t remain and the poverty rate has been growing slowly since to 13.5% in 2016, before starting to fall again last year. Moreover, if Russia’s inflation rises from its last year low of 3.2% to the 6% that is expected for this year, the despite index would be pushed up to 23.6 and Russia’s ranking in the despair index will fall from its current seventh place to 9t h .Arisingdespairindexrepresentsrealpainforthepopulation,butRussia would still rank on par or better than most Central European countries and ahead of the EU.
Perhaps unsurprisingly Ukraine’s despair index is a whopping 44 at the momentrankingit26t h outatotalof33countriesinoursurvey.Butwhatis surprising is that even 44 is a pretty low result given the extent of the economic collapse in 2015 when the economy contracted by 15%. In depths of the 1998 crisis many countries had despair indices north of 60.
With poverty of 24.5% in 2017 – almost double Russia’s rate – the number has been falling. Unemployment has been a steady 9.5% in 2018, which is painful, but not a catastrophe. And inflation is a high 10% but that was also falling as a result of resolute action by the National Bank of Ukraine (NBU) to keep rates high. All said and done Ukraine is deal fairly well with its crisis as far as despair is concerned.
Central Europe
Central Europe is doing a lot less well in terms of despair given the region has been on a three year long boom. The stand out success in the region is Czechia, which has an extremely low despair index number of 15.1, mainly thanks to very low poverty and modest levels of inflation and unemployment, that ranks it in fourth place overall.
Poland is doing much less well due to relatively high poverty of 17.3% coupled with an uncomfortable 5.7% unemployment level to give it a despair score of 24.3. And part of Hungarian Prime Minister Viktor Orban enduring popularity with his base is connected to Hungary’s low despair number of 21.2 – better than the EU – thanks to its low poverty levels, modest inflation and low unemployment.
The surprise from Central Europe is the Baltic States which all score very badly as they all suffer from high levels of poverty (Estonia: 21.7, Latvia: 21.8, Lithuania: 21.9) that has given them all poor despair index numbers of 29.9-32.7 and rank them in the middle of the table.
However, this poor showing is surely partly due to the differences in where the poverty line is set. In Central Asia the line is drawn at those that live on $1.90 a day or less. In Estonia in 2016 a person was considered to be living in relative poverty if his/her equalised monthly disposable income was below €468 euros. In 2016, the income of the poorest and the richest quintile of the population differed 5.8 times.
For comparison, Russia’s average income in 2018 was €532 and the poverty line was set at €134 equivalent. However that does not take purchase price parity (PPP) into account, which would increase the minimum needed to get by
17 UKRAINE Country Report February 2019 www.intellinews.com