| JRL Home | JRL Simple/Mobile | RSS | Newswire | Archives | JRL Newsletter | Support | About
Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

Crisis hits ordinary people

Cash, Calculator and Pen
Ordinary Russians are beginning to feel the brunt of the deepening global financial slump as a depreciating ruble pushes up the cost of living.

The ruble has nosedived some 20 percent against the dollar since mid-September and is the fourthworst performer so far this month among the 25 emerging market currencies tracked by Bloomberg, the agency reported. The Russian Central Bank sold $8 billion in September to slow the ruble's decline, the most since it arrested the currency's devaluation in January 2009.

Largely as a result of the economic turmoil of Russia's recent past, Russians are particularly sensitive to currency movements. A poll conducted by the Public Opinion Foundation in September found that 45 percent of Russians fear the devaluation of the ruble above anything else.

And they are reacting in the same way they did during the 2008- 2009 crisis ­ by buying consumer goods. Now, as then, Russian trade turnover is increasing.

"The working population of the country is stocking up on consumer products to get rid of unstable cash," said Alfa-bank chief economist Natalia Orlova. "But this is pushing up poverty levels ­ as peoples' savings are reduced, they get poorer."

For ordinary Russians, the devaluating currency is worsened by the fact that the country is heavily dependent on imported goods.

"Almost a third of the basic basket of goods depends on the currency and 70 percent of non-food products sold in Russia are imported," said Alexander Osin, chief economist at Finam Management investment bank.

Rising poverty

Russia's state statistics service Rosstat announced in September that some 15 percent of Russians are now living below the poverty line of 6505 rubles ($200) per month, up from around 13 percent this time last year.

While the currency devaluation has not caused the poverty increase, which has taken place over the past few years, it has certainly aggravated it. And the erosion of savings will also cause a slowdown in economic growth, Orlova, of Alfa-bank, said.

"Russia's poverty level has increased in the past two years, in line with the general economic slowdown," Orlova said. "The growth of savings in banks has slowed and this affects the future growth of the economy."

Experts say the rise in poverty levels is having an effect of certain industry sectors. Cheap segments such as Lada cars have seen a growth in sales and Russians have begun to travel abroad less.

Svetlana Shishkina, a manager at the Moscow-based Devisu travel agency said the company has seen a year-on-year drop in sales of New Year breaks to Europe due to the weak ruble.

Russia, Economy - Russian News - Russia - Johnson's Russia List

Bookmark and Share - Back to the Top -        


Bookmark and Share

- Back to the Top -        

  Follow Johnson's Russia List on Twitter Tweet