Page 55 - RusRPTApr21

to cut back on their spending; 62% say that when they’re shopping, they’re willing to buy any brand if it’s discounted; and 20% say that they always choose the cheapest product when shopping.
Even those whose incomes have remained stable have chosen to spend more cautiously. Among the 47% of Russians whose incomes have not been affected by the pandemic, 16% say that they have tightened their budgets regardless.
Russia’s real disposable incomes have fallen to an eight year low as a result of the coronacrisis, falling 3.5% in 2020, according to Rosstat, but the outlook for 2021 is brighter.
Real disposable incomes are down by more than 10% from the 2013 level, the last year of solid growth before Russia’s annexation of Crimea and a slump in world oil prices pushed the economy into recession, the Moscow Times reports.
The standard of living has also been brought lower thanks to Russian President Vladimir Putin decision to modernise the army and to divert all Russia’s spare resources into that effort which was launched in 2012. In effect Putin decided to sacrifice the relative prosperity that has been built up during the boom years in the noughties to strengthen Russia’s military so that it could face down the US. Russia annexed the Crimea two years later.
Since 2012 Russia has been running an austerity regime, long before the oil and sanctions shock hit in 2014 and the more recent subsequent crises. That has weighed on the broader real incomes (disposable incomes count out mandatory payments like utilities, whereas real incomes is simply the an inflation adjusted version of nominal incomes) that have been falling for more than six years, with a few brief respites.
Economists said the government’s limited — but well-targeted — anti- coronavirus financial support helped soften the blow for the poorest families, although an extra 400,000 households fell below the poverty line last year, the RBC news website reported. The number of Russians now classified as living in poverty stands at 19.6mn.
The outlook for growth in both real disposable and real incomes has improved after Russia’s economy got through last year’s annus horribilis in relatively good shape and only a mild contraction versus the original expectations. GDP growth should return this year and higher than expected oil and commodity prices, which began recovering in November, means the budget should be in a modest 0.5% of GDP surplus this year as well as generating windfall revenues that can be spent on economic stimulus. In addition the state has
55 RUSSIA Country Report April 2021 www.intellinews.com