Page 31 - bne IntelliNews monthly magazine September 2024

bne September 2024 Cover story I 31
"One of the essential criteria for being middle class is human capital, which
is the main source of income for its members," The Bell noted. “It is difficult
paid for from the budget. So the Krem- lin began to raise public sector salaries by some 10% a year and kept that up for a decade. Russian lives have always
trillion ($299.3bn) in comparable prices, according to RosStat. The volume of car loans hit an all-time high in July and the automotive sector has completely recovered all the ground lost since the start of the war as Russian car sales this July were higher than in July 2021, the last July with normal pre-war sales.
Will it last? The growth of war-estab- lished middle classes may only be a temporary phenomenon. The CBR issued a very pessimistic medium-term macroeconomic outlook on August 21 that predicts even stronger growth for this year of up to 4%, after the 3.6% expansion last year, but for the econ- omy to hit a brick wall in 2025. Crush- ingly high interest rates, the lack of new capacity, curbed military spending and a shortage of technology will start to take their toll as the Keynesian boost wears off. Consumption growth in particular is expected to come to a standstill as the economy cools and all the forces that have been driving the military spending bump are exhausted.
“Will it last? The growth of war-established middle classes may only be a temporary phenomenon”
to imagine that military personnel and defence industry workers will invest their increased salaries in education or professional development.”
Russia's original post-Soviet middle class emerged in the noughties after
the chaos of the Yeltsin-era receded. Putin’s gift to Russia was his fear of social unrest as the salary gap between the private and public sector rapidly widened – and half the population are so-called budzhetniki, or in jobs that are
been rubbish but these pay rises were transformational. The new middle class threw themselves into the pleth- ora of professional jobs that appeared as a result.
That is not happening this time. It appears that most of these war middle class, flush with cash, have just chosen to go shopping or buy a new car. The retail trade turnover in Russia shot
up by 8.8% year on year during the first six months of 2024 to RUB25.8
In Russia the volume of car loans hit an all-time high in July. www.shutterstock.com
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