The Russian economy averted the collapse many predicted after Moscow sent its forces to Ukraine six months ago, and the high prices of oil exports dampened the impact of Western sanctions, but challenges are still looming for some Russians.
After predicting at some point that the economy will shrink by more than 12% this year, surpassing the production declines seen after the collapse of the Soviet Union and during the 1998 financial crisis, the Ministry of Economy now expects a 4.2% contraction.
What’s happening? High global energy prices have helped the Kremlin deliver on President Vladimir Putin’s promise in March to reduce poverty and inequality despite Western sanctions and inflation. Some economists likened the situation to the Covid-19 pandemic, where authorities increased payments to those most vulnerable to the crisis.
“So far, there are no signs that the decline in living standards is likely to cause disturbances,” said Alexei Firsov, founder of the Platforma social sciences institute.
“The decline in living standards hasn’t reached the point where attitudes to reality begin to change dramatically and the refrigerator is clearly starting to outperform TV,” citing a Russian saying that describes the tension between people’s experiences and what state television leads them to expect. .
Russia’s current account surplus – the value gap between exports and imports – more than tripled year-on-year in the first seven months of 2022 to a record $166.6 billion, as revenues rose and sanctions caused imports to fall.
What measures has Russia taken? Putin ordered a 10% increase in pensions and the minimum wage to cushion the blow of inflation, while major employers such as bank Sberbank and gas giant Gazprom increased salaries from July.
The unemployment rate was 3.9% in June, the lowest level since the statistics service began reporting the figure in 1992, according to the Eikon database.
cost of living
Inflation, which hit a 20-year high of 17.8% in April after the ruble fell to a record low against the dollar, is now expected to close the year at 13.4%, according to the Ministry of Economy.
Since then, emergency capital controls have helped the ruble rise more than 25% this year, making it the world’s best performing currency so far in 2022 after sanctions imposed by western countries.
While the sanctions have meant consumer goods like Guinness beer, Zara clothes and Nespresso coffee capsules have disappeared from the shelves, some Russians told Reuters they are struggling to find basic necessities, including some medicines.
Some complained of a shortage of auto parts as many Western manufacturers suspended operations or left Russia altogether. Russia’s largest automaker Avtovaz cut production and offered to lay off some workers due to a shortage of parts.
Official figures show consumer prices have increased by 10.7% so far this year, compared to an increase of 4.7% over the same period in 2021.
However, according to the statistics service Rosstat, sanitary napkin prices have risen 41% to date, car prices produced abroad 39% and toilet paper prices 27% higher.
source: Noticias
