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8 I Companies & Markets bne June 2021
mostly going to other Commonwealth of Independent States (CIS) countries. Exports are expected to reach a record 30,000 tonnes by the end of 2021.
Russian manufacturers have turned to Soviet recipes, which have mass appeal and enjoy sustained demand from the former Soviet republics. The biggest importer of Russian ice cream is Kazakhstan, which in 2020 boosted its volume of imports by 27%, to 11,200 tonnes, and in monetary terms by 2%, to $20mn.
The United States is also a big buyer of Russian-made ice cream thanks to its large Russian diaspora population. Exports to the US tripled in 2020 to 3,800 tonnes, worth $9.2mn.
BRICKS & MORTAR:
What happens if Russia’s mortgage subsidy programme ends?
Ben Aris in Berlin
Almost as soon as the double whammy of the coronavirus (COVID-19) pandemic and a concurrent collapse in oil prices hit Russia’s economy last
March, the government reacted by introducing a mortgage subsidy programme that cut the effective rate for would-be homeowners buying newly built residential housing to 6.5%. The programme has been a resounding success; in fact maybe a little too successful, as the Central Bank of Russia (CBR)
is worried that a housing bubble may be forming as demand for new apartments has ballooned.
The programme is due to end this summer and industry players think that it may be cancelled or at the very least trimmed down. What will happen then is not clear.
The goal of the programme was multiple. The increased demand for housing allowed construction companies to keep working and avoided layoffs in one of the key growth-driving sectors of the Russian economy.
The flow of loans also provided relief to the banking sector, where mortgage loans have become one of the main money earners for the sector.
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Ice cream sales in Russia were hurt by the coronacrisis after kiosks and cafes were forced to close during the lockdown, but consumers simply shifted to ordering online or buying ice cream in stores.
And the business is increasingly domestic after imports are expected to diminish again by 20% this year to 15,000 tonnes against 19,000 tonnes a year earlier, partly as ice cream imports are very sensitive to FX fluctuations, and last year’s ruble devaluation made imports expensive.
At the same time, the government is working to improve food standards and a new system of labelling will be introduced this summer as well as a green certification standard.
Residential housing construction and sales have been booming since the government introduced a mortgage subside programme, but will probably end this summer.
The Kremlin’s long-term goal of increasing homeownership got a boost too, as it acts as “social cement” and improves the average quality of life. Owning property, so the argument goes, makes people less likely to protest, as well as more subordinate to the state thanks to the dependence on state services and their personal investment into bricks and mortar.
Russians jumped at the deal. Real estate developer says that each percentage point that rates are reduced by adds millions of new customers for whom a mortgage becomes affordable. And rates have been falling steadily for over six years, each year significantly expanding the pool of potential buyers.
The rate cuts stopped this March this year when surging inflation finally forced the central bank to bring its six-year- long easing cycle to an end, but economists believe that the current surge in inflation is the hangover from last year’s crisis and rates could start to fall again as soon as next year.
Housing boom
Since the mortgage market appeared in about 2003 –
the first mortgages were offered by Delta Bank, a USAID funded initiative, as growth of mortgage use is equated with