Page 38 - RusRPTJul22

Heterogeneity is high across both industries and regions. Specifically, a considerable number of companies in the North-West are traditionally focused on European markets and, therefore, face a more significant decline. Contrastingly, those regions that supply their goods mostly to Asia are adapting to the new environment more quickly. The downturn in the agroindustrial and tourism regions in the South of Russia was also not as intense because they have a large share of small and medium-sized businesses and are rather focusing on the domestic market. We always take into account the latest data received from Russian regions when we prepare our decision. I would like to remind you that, before the quite period, we release the report Regional Economy. This review has been published for 18 months already and provides assessments of the situation in Russian regions prepared by the Bank of Russia Main Branches.
Speaking of consumer activity, we could see that it weakened in April—May. Retail turnover declined by nearly 10% year-on-year. There are at least three reasons for this reduction. Firstly, demand adjusted downwards after soaring in late February—early March. Secondly, households’ savings in the last three months were driven by high deposit rates. Thirdly, the growth of consumer lending slowed down. This could be associated with both high interest rates and the fact that people had mostly made large purchases that often require such loans (household appliances and electronic devices) earlier.
We believe that now these factors start to reverse. The overall stabilisation of the situation and better expectations about economic prospects will support consumers’ confidence. The expansion of social support programmes and the indexation of pensions that have already been included in the budget will also revive consumer activity. As households use their stocks, consumption will start to return to its usual levels.
Unemployment remained record low in April. However, during the last month, increasingly more companies started to introduce part-time employment schemes. Some indicators show that the demand for a range of specialists is declining somewhat. Further trends in the labour market will depend on the scale and pace of the structural transformation and the mobility of workforce.
Third. Monetary conditions eased in some segments, but remained tight overall.
According to high-frequency indicators, the growth in lending, especially in the retail segment, slowed down in May. Nonetheless, there are grounds to believe that the key rate decrease in May will support lending already beginning from June. The yield curve of federal government bonds declined to 9% across almost all maturities. Banks are also revising their credit rates downwards. However, due to high economic uncertainty, elevated non-price
38 RUSSIA Country Report October 2020 www.intellinews.com