Economic crisis hurts Russians

30 December 2016 Rustem Falyakhov, Gazeta.ru
More than 40% of Russians have named the economic crisis and increasing prices as the most memorable occurrences of 2016. Russia’s economic crisis has ceased to be an abstract macro-economic value and is directly impacting one’s personal wallet.
street in Omsk
There is nothing surprising in the fact that the economic crisis is uppermost in the minds of Russians. Source:Alexey Malgavko / RIA Novosti

The economic crisis has been the symbol of the outgoing year for Russians, the Romir Research Holding has noted, after surveying 1,000 respondents, aged 18 to 60 years and older, living in cities with populations of over 100,000 people. For Russians, the difficult economic situation in the country has overshadowed all other events, both within Russia and abroad.

While responding to Romir, about the most significant events in Russia in 2016, Russians were divided in their opinions. Every fourth respondent (25%) named the economic crisis in the country as the main feature.

Another 17% of respondents said they would remember this year for the rising prices and high inflation, making a total of 42% of Russians who associated 2016 with the difficult economic situation in the country.

Every fifth Russian named the ongoing military operations in Syria as the main event, and just as many said the doping scandal was the main event. The State Duma elections were called the most memorable by only 2% of respondents.

However, the Russians are not as apolitical as it may seem. They are interested in politics. Asked about the most important events of the year in the world, more than one third (36%) of respondents cited the election of Donald Trump as the new American president, and another 30% cited the fight against the “Islamic State” (banned in Russia).

The Romir study’s results were close to those previously published by the Russian Public Opinion Research Centre. In early 2016, this Centre recorded ever-growing prices and the economic situation in general as worrying factors. 23% of respondents mentioned that as a growing concern.

There is nothing surprising in the fact that the economic crisis is uppermost in the minds of Russians.

Last year, only around 9% of respondents surveyed by Romir mentioned the economic crisis and the devaluation of the ruble. This time, concern was expressed by five times more people.

The year began with Russian expectations quite bright. One third of Russians (33%) had hoped for an improvement in the economy in 2016, according to a global Gallup Poll (held in December 2015). At that time, 27% of Russians were pessimistic, while Russia was listed in 21st place in the overall ranking of economic expectations of 68 countries (compared to 27th place in 2015).

The crisis situation in the economy has deeply penetrated the minds of Russians, who did not change their consumption behaviour, said Andrey Milekhin, President of Romir.

During the 1998 economic crisis, while Russian buyers, after the Soviet deprivations, were unrestrained in fulfilling their needs, focusing on cheap goods and not paying attention to brands, in 2008, buyers became more selective, preferring branded goods. After 2014, after the new round of the economic crisis, caused by the geopolitical situation, the buyers have again changed their behaviour, moving to the rational consumption model, choosing cheaper products.

“Also, 76% of consumers believe that the crisis will end, and end soon – in 2017. Some have conserved their newly acquired buying habits, and these will continue after the economic crisis ends, which will have an enduring impact on the consumer environment,” said Milekhin.

Russian pessimism, when it comes to the economy, has decreased slightly, but remains significant. This is also evidenced by a survey conducted by the Institute of Statistical Studies of HSE. In the third quarter, the personal financial situation improved for 8% of respondents, while it deteriorated for 40% (compared with 7 and 41% in the previous quarter). Expecting an improvement were 9% of the respondents, and deterioration – 22%. Markedly reduced was the number of those who negatively assessed the changes in the economy during the year – from 63% to 52% of the respondents.

The pessimists are more correct, feels Georgiy Ostapkovich, director of the Centre for Market Research Institute at the Higher School of Economics.

“We cannot expect a recovery in the standard of living of the population in the near future – the real disposable income of the population has fallen for two years straight, and the intensity of this process is not decreasing,” he said.

Real disposable incomes in November 2016, compared with the corresponding period last year, decreased by 5.6%, and during the first ten months – by 5.8%, according to Rosstat.

The improvement in sentiments today, according Ostapkovich, is because a part of the population has already adapted to the “new reality”.

First published in Russian by Gazeta.ru.

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