Latest Market Insight

22 April 2021

Economic Update

The International Monetary Fund (IMF) current forecast for Russia is 3.8% up from 3% in January. Growth is expected to continue at 3.8% in 2022, after its contraction by 3.1% in 2020. Inflation is expected to remain at 4.5% in 2021 but to slow down in 2022. Unemployment will continue at 5.4% in 2021 until 2022.

Nevertheless, real disposable incomes have been decreasing ever since 2013. In 2020, disposable income fell by 10% in roubles and by a huge 60.5% when compared in US dollars. In 2020, 13.5% of the Russian population has an income which is below the subsistence level (20 million). The Russian President said at an annual press conference that by 2030 the share of Russians living below the poverty line should decrease by 50% from 13.5% to 6.5%.

Inflation has accelerated sharply since the start of 2021, rising to 5.8% in annual terms during March. Prices for food have risen even faster by 7.6%. Non-food products rose by 5.9% while the cost of services increased by only 2.9%. Analysts forecast that the inflation rate has probably peaked and should start to decline over the coming months, though the latest fall in the value of the rouble, and expectations for a government spending spree ahead of parliamentary elections in September could see inflation stay above the central bank’s target of 4% until at least 2022.

COVID-19 update

As of April 18, Russia confirmed 8,632 new coronavirus cases, Moscow registered 2,252 new cases (26% of all Russian cases), 695 new cases were registered in St. Petersburg (8% of all Russian cases), meaning that the capital is still the hub of the infection. To date Russia does not seem to have been infected by any of the super infectious variants reported in Europe since January and more recently in India.

Russia however has a disappointing vaccinated rate with only 4% of the total population being fully vaccinated with a slightly higher proportion of vaccinated people in Moscow, St. Petersburg, and other big cities. 820,000 Moscovites, or 6% of the capital's total population, have been fully vaccinated since December last year. Unlike Europe, the issue is not the supply, but the lack of trust in the vaccine by the general public.

India has authorized Russia's Sputnik V coronavirus vaccine making it the 60th country to approve Russia's Sputnik V vaccine.

Russia restricted flights to Turkey and stopped air connection with Tanzania

Due to an escalation of the covid pandemic and probably due to some political differences between Russia and Turkey, Russia has limited the flights connection to Turkey to only two flights per week between Moscow and Istanbul from April 15 to June 1, 2021. Earlier, the body dealing with the pandemic in Russia stated that the highest proportion of the new virus strains that have been brought to Russia came from people arriving from Turkey. Tourists currently in Turkey will be able to continue their vacation and return on the scheduled departure date but new flights cannot take off from April 15th.

Turkey was one of the first countries which opened to Russian tourists in August 2020, with flights from 25 Russian cities to Antalya, Bodrum and Dalaman resorts, as well as to Istanbul, which is a major hub for connections to many other destinations for Russians. Air connection to Tanzania have also been halted from 15 April till 1 June.

Greece to recognise Russia’s Sputnik V vaccine

Greece has confirmed that it will bilaterally recognise the Russian Sputnik V vaccine, making it easier for Russian tourists to travel and spend their summer holidays in Greece. During a visit in Moscow, Greek Tourism Minister assured Russians that Greece’s national vaccination committee includes the Russian vaccine as an equivalent to European vaccines for travel purposes.

The EU Green Pass regulation due to be adopted soon does not recognise vaccines not approved by the European Medicines Agency (EMA).

Russian and other nationals authorised to travel to Greece should either carry an authorised certificatethat they have completed both vaccination doses two weeks before their arrival or a negative COVID-19 PCR test up to 72 hours before their flight. All travellers arriving in Greece, may be required to undergo a random mandatory health check. Greece is expected to be ready to fully open to tourists on 14 May.

Russians will be able to return to Spain in late Summer or early Autumn

The travel experts from the Spanish tourism industry expect that Russians should be able to return to Spain in late summer or early autumn of 2021. Barcelona has already included Russia among its key markets. During the pandemic, the tourist flow from Russia to Barcelona, ​​as well as to Spain as a whole, decreased by more than 90%. According to Executive Director of Barcelona Tourism Ms. Marian Muro, the situation is looking better in 2021. There are currently 13 flights per week in April 2021, compared with only one in 2020.

Ms. Marian Muro said Spain should be ready to receive tourists by June. However, the following conditions have to be met: vaccination of 70% of the local population, the introduction of "green passports", as well as the recognition of such passports issued by third countries, as well as an improvement in the infection rates in Spain. If all these conditions are met, Russians will be able to return to Spain as tourists at the end of summer or in autumn.

Currently, about 40% of accommodation facilities in Barcelona are open, including 121 hotels with 28.3 thousand beds. Most of these hotels are of 4-5* categories. About 80% of cultural sites, including the opera house, are working and can receive tourists.

Croatia opened for tourists vaccinated with Sputnik V

Russians vaccinated with Sputnik V can visit Croatia from April 1 without quarantine or additional coronavirus tests.  Vaccinated tourists can come 14 days after receiving their second jab.  Entry is also allowed for people with negative covid test taken up to 3 days before arrival and for those who have already recovered from the coronavirus infection and have an antibody certificate valid for 180 days. Currently there are no direct flights to Croatia, but S7 plans to start flights to Pula and Dubrovnik at the end of April.

Flight prices to Cyprus skyrocket

Aeroflot has withdrawn tickets from Moscow to Larnaca from their sales system for May holidays period (May 1-10). The last flight on the eve of the May holidays will take place on April 28. Earlier, the national carrier operated up to 5 weekly flights from Moscow to Larnaca. Apart from Aeroflot, flights from Moscow to Larnaca are operated by Pobeda, Nordwind Airlines, S7 and Ural Airlines. These flights remain in the timetables of all carriers; however, the frequency of flights is 1-2 flights per week.

The shortage of flight capacity has already led to a rise in prices. A one-way ticket from Moscow to Larnaca on April 30 on the Ural Airlines costs more than $1,200. Low-cost carrier Pobeda, which operates on this route only once week, has also significantly increased the cost of the flight: to fly to Larnaca on May 1 will cost almost $750 per passenger.

As explained by travel experts, since all flights to Cyprus still have a cargo-passenger status, they can appear and disappear from booking systems in a fairly short time span.

Demand for the Seychelles boomed after the direct flight opened

The demand for the Seychelles is booming since the first flight took off to Seychelles, with seats being fully booked for two months ahead, according to the information from the Russian Travel Industry Union.  The flight on April 2nd was 99% loaded, as a result Aeroflot increased the capacity to two flights per week instead of one which was initially announced. Flights for April and May are already fully booked, with very few seats are left for June.

There is also a lack of accommodation available, made worse by the additional sanitary measures required by the authorities. As a result, tour operators have noted an increase in the lead time with bookings for autumn and even winter for this destination, which is very unusual nowadays.

Russian tourist plans for summer 2021

Tinkoff Travel service carried out a survey on Russian’s travel plans for the May holidays and summer period, based on ticket purchase data which analysed 100 thousand customers of Tinkoff bank.

The main conclusions are as follows:

  • 80% of the Russian traveller’s plan to travel domestically during the May holidays.
  • Until April 12, Turkey was the most popular overseas destination for the May holidays with 54% of travellers planning to travel abroad having booked to travel there, until the air connection was suspended.
  • After the closure of Turkey, the demand for foreign tours to Cyprus and the UAE increased by 25% as well as the cost of air tickets to Uzbekistan, Armenia, the Maldives and Croatia.
  • 10% of Russians are not planning vacations in 2021.
  •  $125 is an average cost of flights to the most popular destinations in May 2021.
  • The cost of tours on May holidays is 20% more expensive than on other dates.
  • The average budget per traveller is $790.

As for the summer, Russian tourists are stubbornly determined to travel internationally, with only 10% of those surveyed deciding not to go on an international trip. The trends are as follows:

  • 19% of Russians have already travelled or are planning a trip in spring 2021. 25% are planning their vacation in autumn, 42% in summer.
  • 50% are planning a two-week vacation. 15% intend to spend one or three weeks on holiday. 10% want to take one-month vacation, and 10% have planned to take more than a month.
  • 78% of respondents plan to buy tickets and tours on their own. 11% will use online booking services and only 8% will seek help from travel agencies.
  • 39% of Russians consider sightseeing and city excursions to be the best travel option, 33% choose active recreation and sports, 25% prefer to relax at the beach.
  • 31% of respondents are ready to spend from $260 to $525 per person. Another 30% - from $525 to $790.
  • 66% of all travellers are families with children.

 

Ђ Back to journal