Latest Market Insight

16 December 2020

Economic Update

The rouble stopped devaluating and steadied its value since December 9. It was at its strongest value in August, 2020 when it was 73.5 roubles to the US dollar. Despite the fear that a combination of the US presidential election in early November, which might have resulted in further sanctions against Russia, the poisoning of Kremlin critic Alexei Navalny and the political crisis in neighbouring Belarus, may have reduced the value of the Rouble further, in fact it has stood strong.

The economic situation in Russia continues to deteriorate, President Vladimir Putin said at a meeting on economic issues in early December. This is due to a reduction in people’s incomes, labour market pressures (high unemployment) and the growing costs of essential food prices.

The annual inflation rate in November 2020 went above the Central Bank's target and reached 4.42% after reaching 4% in October. The devaluation of the rouble earlier in the year and the rise in prices for many products continues to fuel prices and thus the rate of inflation.

According to a business survey of the Center for Strategic Research (CSR) the number of people employed in small and medium-sized enterprises (SMEs) will decrease by 1.1 million in 2020. The CSR expects a reduction of 2.9 million jobs in total, of which 38% will be in small and medium-sized businesses.

The Sputnik vaccination is rolled out in Moscow

Russia's mass vaccination against the coronavirus began in Moscow on December 5. Residents belonging to high-risk groups are the first to receive the vaccine developed in Russia, called Sputnik V. The Vaccine is already available at 70 state-run clinics across Moscow.

Flights to start to SE Asia for Russian New Year holidays

Sri Lanka has announced the opening of its borders to international flights, including charter flights, from December 26. Aeroflot has already applied for flight permission for the Moscow-Colombo route from December 26 to March 28. To enter Sri Lanka, tourists need a PCR test, travel insurance as well as supply of medical masks. Travellers planning to visit Sri Lanka need to stay for at least 14 days and are required to remain in quarantine for up to 7 days. According to tour operators, this destination is likely to be in high demand among FIT travellers, but it is unlikely to result in large flows until the restrictions are lifted.

Aeroflot also plans to start flights to Bangkok from January 7 and to the Seychelles from December 25. S7 Airlines also announced the start of flights to Bangkok from Novosibirsk on December 26.

More flights open to Central Europe: Italy, Germany Austria

Utair is gradually resuming flights to international destinations. In December, the carrier will start operating flights from Moscow to Milan. The first flight is scheduled from December 17. Further flights will operate on December 24 and 31. The flight are available for only a limited category of travellers.

S7 Airlines announced the launch of direct flights to Germany, Austria, and Cyprus in December. Flights from Moscow to Dusseldorf started on December 11 while flights to Vienna will begin on December 27th and to Larnaca (Cyprus) on December 28. The flights will operate once a week as cargo and passenger flights. Only certain categories of passengers who are allowed to make international flight under the current COVID restrictions will be accepted on board.

Cyprus to open for Russian tourists from March 1

Russian travellers are considered to be the "red" risk group for entry to Cyprus. In order to entre Cyprus, Russians need to provide a negative PCR test within 72 hours of departure. Another test will be made on arrival in the country. A two-week quarantine is not required.

Aeroflot and Pobeda airlines have already started flights from Russia to Cyprus. S7 will launch flights from December 28. Nevertheless, entry to Cyprus, is only permitted for Russians who have a residence permit, as well as family members with Cypriot citizenship and diplomats.

Russians are the most enthusiastic when it comes to travelling abroad

Active and well-to-do Russian tourists are ready to be among the first in the world to go abroad as soon as the borders open, according to experts from Global Blue duty-free chain which operates at many international airports. The positive attitude of Russians towards travel will help the recovery of the tourism and retail sector in Europe.

Of 16,000 shoppers from the top spending countries in October included respondents from China, Southeast Asia, the Persian Gulf, Russia and the United States. It was noted that mood of international travellers has improved and 66% of respondents said they were ready to travel as soon as border restrictions were lifted.

Of all the travellers, wealthy and active tourists are the ones that want to go on foreign trips again the most (these include people whose spend on purchases abroad exceeded 40,000 euros in the last 24 months) and frequent travellers (who travel at least three trips abroad in the last 2 years).

Iit is noteworthy that 100% of Russian respondents from these categories (who travel a lot and make big purchases abroad) declared their readiness to go abroad "as soon as the opportunity allowed."

The majority of Russians will not travel for the New Year

According to the survey of online travel platform, most of the respondents reported that they would stay at home for New Year holidays (December 25 – January 10). The share of those who have decided not to travel for the New Year holidays is growing rapidly. A survey conducted by in early September showed that 54% of Russians planned to stay at home for New Year, that has now reached 72%. Last year, this share was around 50%.

12% of respondents have already bought tickets or travel packages for New Year, 8% plan to do so in the near future and 4% will book everything at the last minute. Another 4% did not buy tickets yet because they plan to travel by car. Among those who bought tickets for the New Year period, 56% bought them in November, 16% in October. About 22% made their reservations in early December.

Russians increase the frequency of one-way ticket bookings

One-way flight bookings have significantly increased in early December 2020, the online travel agency Biletix reported. Compared to December 2019, the number of one-way bookings has increased from 42% to 53% for domestic flights and from 51% to 72% of international flights. Experts associate the sharp increase in demand by changes caused by the pandemic and the massive transition of offices and educational institutions to remote work. Many Russians travelling abroad are not sure when they will return home.








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