Recession in Russia

Russians now spending half of their income on food

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As real incomes continue to contract in Russia amid an ongoing economic slump, spending on foodstuffs is taking up a larger and larger part of the average citizen’s budget.

In February 2016, for the first time in eight years, food and alcohol, along with tobacco products, were the main part (50.1 percent) of Russia’s retail turnover.

The statistic was published in the monthly monitoring report of the population’s social-economic situation and wellbeing prepared by the Institute of Social Analysis and Forecasts at the Russian Presidential Academy of National Economy and Public Administration.

The previous “record” was set in May 2009, when the share of food products reached 49.6 percent of retail turnover.

“Currently there is growth in the population’s spending on food, which logically reflects the fact that real income has decreased and poverty has increased. It is known that the poorer the household, the higher the part of the budget that it spends on food,” say the report’s authors.

The institute calculated that in February 2016 Russians’ real income in comparison to the same period in 2015 had declined by 6.9 percent and real salaries had declined by 2.6 percent. The poverty level by the end of 2015 had increased by 2.2 percent to 13.4 percent.

According to the monitoring report, 50 percent of the population have experienced a decrease in living standards, which has consequently resulted in a reduction of consumer activity. Both low-income and medium-income classes have begun to economize.

By March 2016 the number of poor Russians who had begun economizing on goods and services had increased to 89 percent and the number of people from the middle class who were cutting back their spending had grown to 79.3 percent.

Of the Russians surveyed, 55.8 percent said that they were ready to cut out non-essential goods they were used to buying.

“Besides buying food, Russians must make monthly payments to cover their debts, mortgages and other financial commitments. In such cases the majority of Russians either stop buying cars, expensive electronics, furniture, etc., or don’t buy them at all,” said Natalya Kolupayeva, a senior analyst at Raiffeisen Bank.

According to the report by the Institute of Social Analysis and Forecasts, people are mostly pessimistic in their evaluation of the economic situation: “The light at the end of the tunnel is moving farther away.”

In the words of one of the report’s authors, Maria Ivanova, in the course of the year the share of Russians’ budgets occupied by food products may increase.

“The reasons will be the same: The continuing reduction of the population’s real income and consequently, priority consumption of essential goods,” she said.

www.rbth.com

Russian fruit and veg imports fell last year

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In the first three quarters of last year, Russians imported a total of 4,791 million tonnes of fruits and vegetables, of which 3,816 million tonnes corresponded to fruits and the other 975 thousand tonnes to vegetables.

For comparison, in the corresponding nine months of 2014, fruit and vegetable imports totalled 5,965 million tonnes, while the volume for the entire year 2014 reached 7,934 million tonnes.

Of the 4,791 million tonnes imported between January and the end of September 2015, the largest share corresponded to bananas, with 889 thousand tonnes, followed by apples, with 618.2 thousand tonnes, tomatoes, with 535.1 thousand tonnes, mandarins, with 328.3 thousand tonnes, oranges, with more than 325 thousand tonnes, and onions, with slightly less than 260 thousand tonnes.

The largest exporter to the Russian market in the first nine months of last year was Ecuador, which provided essentially 100% of all bananas imported by Russia, with 876.8 thousand tonnes. In second place we found Belarus, with 817.7 thousand tonnes, Turkey, with 766.8 thousand tonnes, China, with 448.8 thousand tonnes, Egypt, with 321.7 thousand tonnes, and Israel, with about 209.0 thousand tonnes.

www.freshplaza.com

Imports to Russia from non-CIS countries in 2015 fell 36.4%

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According to preliminary customs statistics, in 2015, imports from non-CIS countries to Russia amounted to almost $162 billion, which means that in comparison with 2014, they decreased by 36.4%.

In December 2015, the value of imports from non-CIS countries totaled $14.8 billion, which compared with November 2015, is an increase of 6.2%, while compared with December 2014, the value fell by 28.3%. In December purchases of food products fell by 23.0%, to $ 2.354 billion. Vegetable imports decreased by 21.2%, while imports of fruit increased by 2.9%.

www.freshplaza.com

Real wages and retail sales falling, while unemployment rate rising

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Retail sales fell 13.1% year over year, worse than the 11.5% market estimates. The decline likely means consumption declined in the fourth quarter.

“This will cause the recession to be extended for at least a sixth quarter,” says Daniel Hewitt, a Russia economist with Barclays Capital in London.

Real wages fell 9.0%, but that’s better than the 11% decline in October. Unemployment on the other hand rose to 5.8% from 5.5% in October, so within any margin of error.

Russian industrial is still negative, falling 3.5% on the year. Consensus estimates had it at -2.9%. The good news is that the negative numbers are not as high as they were a few months ago. They’ve been on the upswing for the past six months, but are still in the red.

www.forbes.com

Russia declares the recession has ended despite continuing low oil prices and sanctions

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Despite continuing low global oil prices and Western economic sanctions, Russia’s recession has ended, the country’s economic minister said Monday. The announcement implied third-quarter growth in Russia, but Economic Minister Alexei Ulyukaev provided no figures to support his statement.

“According to formal indicators the recession in the Russian economy has finished,” Ulyukaev said.

Russia’s economy has been battered since harsh economic sanctions were applied by the U.S. and European Union over the annexation of Crimea from Ukraine in March 2014. Low global oil prices down from their high of over $100 a barrel over a year ago have also hit Russia’s economy hard.

Ulyukaev said Russia could experience as much as a 3.9 percent economic decline in 2015. The World Bank’s low-range forecast for 2015 predicts a 4.3 percent economic contraction for Russia with a continued contraction in 2016 at 2.8 percent. The World Bank estimates the country’s gross domestic product will stop falling in 2017. Even the World Bank’s revised baseline forecast for 2016 shows a 0.6 percent decrease with an economic recovery not taking place until 2017.

“We see that the low point was reached in June, and from July, if we are talking about month-on-month dynamics taking seasonality into account, we see a small positive rise — 0.1 percent in August from July, 0.3 percent in September and 0.1 percent in October,” Ulyukaev said describing the country’s GDP, Reuters reported.

Russia’s GDP fell by 3.6 percent in October, an improvement from 3.8 percent in September, AFP reported. The country’s poverty rate has climbed and now numbers 21.7 million people.

Ulyukaev’s statement comes as other experts and officials make critical evaluations of the Russian government’s economic policies.

“We have for the first time since early 2000 seen the decline in real incomes,” said former Finance Minister Alexei Kudrin Saturday, according to Russia’s state-run Tass news agency. “In my opinion, government measures to support the economy of the population are not enough.”

Two consecutive quarters of negative growth led to the official recession label. Russia has experienced a recession since last year, with the country’s currency losing value and inflation rising.

www.ibtimes.com

Russians cut spending on restaurants and night clubs

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Russians are cutting back on visits to bars, restaurants and nightclubs as the price of food and alcohol rises amid a recession.

A survey by consumer research firm Nielsen published Friday found that almost half of respondents were spending less money on going out. Russians have seen the value of their wages fall sharply thanks to double-digit inflation over the past year.

The survey, which polled 1,000 people across Russia last month, said 49 percent of respondents had not been to a bar once this year, up from 28 percent last year, and 46 percent had not been to a pub, compared to 32 percent percent in 2014.

Sixty-two percent of respondents had not visited a nightclub this year, up from 45 percent last year.

Restaurant and cafe visits also fell, the survey found, and diners have begun ordering less wine and fewer desserts.

Respondents said they were cutting back due to a lack of money and the increasing cost of food and drink. Prices began rising last year, thanks to embargoes on a range of foods from the United States, the European Union and some other countries, and a sharp weakening of the ruble, which has made imports more expensive. Food prices were, on average, 17.4 percent higher in September 2015 than the year before, according to official statistics.

Wages, meanwhile, have risen more slowly, and the economy is in recession.

“Visiting restaurants and bars has become a highly expensive activity,” Nielsen’s head of consumer surveys, Yekaterina Petrova, was quoted as saying in a press release. “Many people are saying that they have stopped going out unless there is a reason to.”

www.themoscowtimes.com

Russian fruit prices increase further

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On average, fruit has become 30 to 50 percent more expensive in the past 12 months. The cause is a weak rouble and the boycott of Europe.

Оranges show the biggest price hike. In September, prices were 57.4 percent higher than a year before. Bananas, apples and pears became a third more expensive on average. Import has become a lot more expensive since the rouble lost 45 percent of its value. According to statistics, 90 percent of the consumed fruit in Russia is imported. Prices for food in general increased by about 17.4 percent on average.

Retail sales going down

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In September, the turnover of retail trade in Russia fell down by 10.4% to 2.3 trillion rubles, according to the Russian Federal Statistics Service (Rosstat). This is the maximum decline in the past 15 years. In the first nine months of 2015, this figure decreased by 8.5% to 19.9 trillion rubles.

The previous record was registered by Rosstat in April this year, when the decline was 9.6%.

In monthly terms, retail sales in September decreased by 3%, that is the first decline since April 2015. In April, sales declined 2.6%, in May, they increased by 2.4%, in June – by 0.2%, in July – by 3.3%.

www.retailer.ru

IMF downgrades 2015 economic forecast on Russia to minus 3.8% of GDP

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The International Monetary Fund (IMF) downgraded its economic forecast for Russia as it projects recession of 3.8% in GDP for 2015 and of 0.6% for 2016 in its new analytical research prepared to annual meeting, TASS correspondent reports with reference to informed sources.

In end-June, IMF experts forecasted recession of 3.4% for 2015 and 0.2% growth for 2016 while in April the organization also projected the Russian economy will decline by 3.8% this year.

The downgrade is largely due to recent falls in oil prices on the global markets.

The IMF also expects inflation to reach 15.8% in Russia this year and 8.6% – in 2016.

All in all, the fund’s projections are in line with those given by the Russian authorities. The Central Bank said on September 11, it expects recession in Russian to stand at 3.9-4.4% of GDP this year and at 0.5-1.0% of GDP next year. Earlier the Economic Development Ministry slightly downgraded its projection on GDP decline for 2015 – to 3.6% from 3.3%.

The new report will be officially presented by the International Monetary Fund on October 6.

www.in.rbth.com

More Russians in poverty

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Almost a seventh of the Russian population lives under the poverty line. This was shown from official data Russia released last week. This corresponds to almost 22 million people. In the first six months of this year the number of people below the poverty line increased by 14.8 % to 21.7 million people. These Russians live off less than 10,017 roubles (147 dollars) per month. There are probably more Russians living in poverty, other researches place the minimum level at 22,700 rouble (334 dollars) per month.

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