Latest Market Insight

23 February 2021

Economic Update

The IMF reported that Russia has weathered the coronavirus pandemic, economically speaking, better than many other countries, nevertheless, its economic growth is too slow to catch up with advanced economies. Despite Russia entered the Covid-19 crisis with a strong economic set up, several factors, including low oil prices and sanctions, has put Russia on a slower growth trajectory. The IMF predicts that Russia's recovery should accelerate by mid-2021 when the second wave of the pandemic recedes, vaccines are widely available and oil production cuts are reduced under the OPEC+ agreement.

Russia’s Central Bank decided to keep the interest rates at 4.25% per annum. In December and January, prices continued to grow at an elevated pace, as demand recovered faster than expected. The Bank of Russia predicts that Russia’s GDP growth for 2021 will be around 3-4%.

The rate of unemployment in Russia has stabilized and has decreased by half a million compared with the peak period in Mid-2020, leaving 4.3 million people officially unemployed.

On the positive side, Russian households have doubled their savings from last year, despite a fall in disposable incomes and the rise in unemployment. Total savings jumped more than 2.2 times to $70 billion at the end of 2020. Household consumption was down 8.6% last year which was much higher than 3% slump in real disposable incomes. However, the higher savings rate should not necessarily be seen as a sign of economic strength, as an increased proportion of savings is held as cash, an increase of 29% which suggests nervous expectations for the future.

COVID-19 update

On February 18, Russia confirmed 13,447 coronavirus cases, a 39% drop since mid-January. Moscow registered 1,950 new coronavirus cases, a 44% drop over the month. As of February 17, more than 555 thousand people were vaccinated against COVID-19 in Moscow. 2.2 million people were vaccinated in the whole of Russia as of February 10, according to the Gamalei Center.

Russia has approved the manufacturing of the Covid-19 Sputnik V vaccine in Serbia. Health workers in Bosnia received the first dose of Russia's vaccine. Montenegro, St. Vincent and the Grenadines, Uzbekistan and Kazakhstan have authorized the Russian vaccine and has so far been approved by 27 countries.

The Russians regions are gradually lifting the restrictions, with Chechnya lifting the requirement to wear face masks in public places. All inbound travel restrictions to the Russian region have been lifted. The republic of Udmurtia in Russia's Central Volga District removed mask-wearing requirement from February 12.

Outbound travel fell by 70% in 2020

In 2020, Russian citizens made only 14 million international trips abroad. This is reduction of 71% compared with 2019 (48 million trips). 54% of all outbound trips in 2020 took place before the first wave of Covid-19 restrictions and fell in the first quarter by 7.5 million trips, and only 47% of trips were made in the remaining three quarters of the year.

Of the total number of international trips in 2020, 42% (5.9 million trips) were to the former Soviet countries compared to only 30% in 2019. These trips are usually for visiting friends and families. As for leisure travel, it accounts for 40% of total trips abroad (5.6 million trips) vs. 36.5% in 2019.

The leading 10 countries visited by Russians in 2020, including the "pre-pandemic" visits during the first quarter of 2020 are shown in the graph below.












Slovenia open borders for Russian tourists

Slovenia has opened its borders to foreign travellers from the EU, as well as for other regions, including Russia. From February 13, visitors from countries on the "red list", which included Russia, can enter Slovenia with a negative PCR test within 48 hours prior to arrival, as well as those who have been vaccinated. They will need to prove they have Covid-19 antibodies up to 21 days prior to the trip but no more than 6 months. 

Tour operators launch flights to Cyprus

Cyprus will open to Russian tourists on March 1. It will be possible to get a visa to Cyprus from March 1. To enter the country, Russians need to show a negative PCR test within 72 of arrival. A second test will be taken at the airport. In addition, all tourists must register on the CyprusFlightPass electronic platform 24 hours prior to departure (the same system as UAE).

TUI Russia plans to launch flight programmes to Larnaca from 11 Russian cities: Moscow, St.Petersburg, Rostov-on-Don, Mineralnye Vody, Krasnodar, Samara, Kazan, Ufa, Tyumen, Surgut and Bryansk. In addition, they plan to launch a flight from Moscow to Paphos. According to TUI, the prices remained at the level of 2020. Until the end of March, an early booking promotion will be provided for the summer season.

TEZ Tour is also preparing to launch charters flights but has not yet announced the dates. Traditionally, the opening of the summer season in Cyprus starts early on May 1st.

Biblio-Globus already announced flights from Moscow to Paphos on March 3 and 5, and from Moscow to Larnaca - on March 7 with Rossiya Airlines.

Russia’s Pobeda to resume flights to Italy in March

Russia’s low-cost airline Pobeda will restart flights to Milan Bergamo (Italy) on March 26. Regular flights between Russia and Italy were suspended due to the coronavirus pandemic. However, flight connectivity has continued to Italy for certain criteria of visitors such as permanent residents and other categories such as high-qualified medical workers, students, diplomats, or people requiring medical treatment, who can already travel.

Russians are strongly influenced by the opinions of friends and relatives when planning to travel

When planning a trip, 53% of Russians rely on the opinion of their family or relatives. Whilst 47% rely on the opinion of their friends. Only 16% rely on the opinion of their work colleagues. 35% read articles and online publications. 14% of respondents are influenced by travel programs on TV and only 9% took into consideration the recommendations of well-known travel bloggers. Tour operators and travel agents are considered more trust-worthy than the media with 18% of respondents taking their opinion into consideration. While 10% rely on the recommendations of local tour guides and local residents.










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