Latest Market Insight

20 January 2021

Economic Update

2020 is the first year that Russia became one of the world’s top 5 economies. This is based purely on purchasing power parity. By macroeconomic standards, Russia’s $1.5 trillion economy weathered the first year of the coronavirus crisis better than almost every other major economy in the world. Notwithstanding being the 4th most affected country in terms of Covid virus infections with almost 3.4 million infections and 63,000 deaths.

Other countries are doing much worse, with many mature economies losing an average 6% of their GDP and many European economies losing 10%. Russia, conversely, is estimated to have contracted by just over 4%. That is much less than the global average. Russia's economy is forecast to reach its pre-coronavirus size again by the end of 2022, with a growth rate of 2.8% growth in 2021 and 2.2% growth in 2022.

The coronavirus pandemic, the escalation of the geopolitical environment and the reduction in investor’s appetite for risk in 2020 resulted in a substantial weakening of the Russian ruble against the main currencies, making it one of the most under-valued currencies in the world. The Rouble lost 20% of its value against the dollar and 32% against the Euro in 2020, but is expected to start recovering, as oil prices increase and due to the current better management of the economic situation. The Rouble is currently the most under-valued currency in the world, therefore we can expect its value to increase in 2021, making foreign holidays less expensive.

In 2020, inflation reached 4.9% against 3% in 2019. The growth rate of prices in 2021 is expected to return to the Central Bank's target of 4%, and for most of the year will be in the range of 3-3.5%.

Even though inflation is expected to be under control again in 2021, other longer-term weaknesses remain. Even before the pandemic, Russians had already suffered 6 years of lower living standards, with disposable incomes down around 8% compared to 2013 levels. Last year wiped off another 5%. More than half of all households had no savings on the eve of the crisis.

Faced with a slow-burning demographic crisis, bruised businesses, federal budget cuts and mass outflow of labor migrants, employment levels are set to remain significantly below their pre-crisis levels in 2021. 60% of Russians said that opportunities to earn a decent wage had got worse over the last 12 months, while more than 40% said they were scared about the growth in unemployment and another economic crisis.

As for businesses, Russia’s small companies were almost twice as likely to suffer negative consequences from the coronavirus pandemic than their larger counterparts. More than 60% of small and medium-sized businesses reported a negative hit from the pandemic, while just a third of large firms said the same.

COVID-19 update

As on January 18, Russia confirmed 22,857 new coronavirus cases and 471 deaths. Russia announced that 1 million Russians have received Sputnik V coronavirus vaccine. However, 60% of Russians are unwilling to take the coronavirus vaccine compared with 40% willing to vaccinate, according to a survey by job-searching website

Moscow has extended restrictions aimed at slowing the spread of the coronavirus until January 21. All Moscow schoolchildren will be able to return to in-person classes on January 18. Life in the Russian capital could return to normal by May, as long as people get vaccinated, Moscow Mayor said. Moscow has vaccinated around 140,000 citizens so far.

Russia resumes flights with Vietnam, India, Finland and Qatar whilst flight capacity increases to Egypt

From January 27, flights will resume from Russia to Vietnam, India, Finland and Qatar. Flights on the Moscow-Hanoi and Moscow-Delhi routes will operate on a twice weekly basis. Flights from both Moscow and St. Petersburg will resume to Helsinki twice a week. Flights to Doha will resume from Moscow three times a week. Travel to these destinations is permitted only for specific purposes and are not fully open for leisure travel. Most importantly, however, for leisure travel is the increase in flight capacity from Moscow to Cairo which is to increase to five flights per week.

Sri Lanka and the Seychelles open borders for international travel

Sri Lanka officially opens its borders for international travel from January 21. All tourists are required to take PCR tests and there is a minimum stay requirement of 14 days. During this time visitors will be required to stay in a predetermined tourist zones of their choice in one of 131 certified hotels. The government has also identified 14 tourist attractions that visitors can visit during their stay in Sri Lanka.

The Seychelles opened borders for foreign tourists, including Russians, on January 15. Upon arrival, tourists need to provide a certificate of Covid vaccination. Travelers will also need to present a negative PCR test for coronavirus taken no later than 72 hours before arrival.

S7 airline opens sales of tickets to three Italian cities in March

S7 airline has opened ticket sales to flights from Moscow to Bari, Olbia and Pisa in Italy with the scheduled departures from early March. The Moscow - Bari flights are scheduled from March 5. Flights to Olbia (Sardinia) and Pisa are available from March 6 and 7, respectively. Flights are currently limited to those Russians with permission to fly to Italy.

Russians preferred holiday destinations in 2020

According to OneTwoTrip the following holidays were preferred by Russians in 2020:

  •          64% of Russians prefer to spend their holidays on the beach
  •          56% would choose a cultural trip
  •          33% - outdoor activity holidays, in the winter skiing and snowboarding are the most popular, while in the summer trekking, hiking and swimming are the favorites
  •          27% prefer recreational trips
  •          22% would go on a cruise holiday
  •          12% are interested in extreme sports.

In 2020, 69% spent their holidays as they had planned, but the rest were impacted by disruptions from the Covid pandemic: 66% of respondents who stayed at home decided not to travel due to quarantine or illness and 33% could not travel due to a job loss or financial difficulty.

Russian travels during the pandemic

According to the survey of, 20% of Russians read the news before embarking on a trip to understand what restrictions have been imposed by a destination. Approximately 11% of respondents try to contact relatives and friends who live in the country before planning a trip. Another 2% read the reviews of those who are currently in the city. The infection rate of a destination (country or city) is a factor which is taken into consideration by 9% of travellers. The majority of travellers (58%) do not specifically look for information about the situation in the region when planning a trip.

For many travellers the mandatory vaccination before travel could make them stop traveling. If such a requirement is introduced, it will affect the plans of 29% of travellers: they would rather not go anywhere than get vaccinated. Russians are more likely to make a PCR test before or after the trip, and only 5% of respondents will refuse to travel in case a test is required. For 19% of Russians, a ban on going outside the hotel will be critical. 18% will refuse to travel in the event of mandatory quarantine before or after the trip. The requirement to register everywhere by QR code will force 9% of respondents to refuse to travel. 4% of the respondents said they would not go where the curfew was imposed, cafes and restaurants were closed, or museums did not work.

Russians dream of traveling to Europe

A survey conducted by online travel platform showed that 12% of Russians are dreaming of going to Italy as soon as flights allow. A slightly smaller proportion of respondents are planning to visit Spain (9%) and Thailand (7%) followed by Germany (6%). At least 5% of Russians plan trips to Greece, Turkey and the Czech Republic. According to Russian tour operators, Egypt, Tunisia, Montenegro and Croatia are among the leaders in terms of requests for 2021.

The results are partly in line with a study conducted by Aviasales (a leading online aggregator). Based on a survey of 5850 users, it found that after easing the Covid-19 restrictions, 20% of Russians plan a trip to Italy and 13.6% want to go to Spain.

Summing up the results of 2020, noted that about 60% of all package tours sold were in Russia. Turkey was in second place in terms of demand (35%). Whilst at the beginning of the year, there was an interest in trips to Thailand, but now the UAE is in third place. In 2020, the overall volume of package tours decreased by about 45% compared to 2019. The growth in demand and an increase in the average spend are not expected before April-May 2021 when Russia is expected to fully reopen international borders.

Five types of trips that will be popular this year presented five types of trips that will be popular in 2021.

Solo Travel. The thirst for travel, restrained by the pandemic, will push people to travel alone. Prior to the pandemic, 20% of Russians surveyed were planning a solo vacation. This trend will continue this year. 19% of respondents intend to go on a solo trip in the future.

Simple luxury. As the pandemic unexpectedly changed the plans of many travellers, the opportunity to go somewhere and relax is perceived as luxury in itself: 40% of respondents from Russia noted that in the future they would no longer take travel for granted. Only 9% are planning a luxury vacation (for example, in a villa or in a five-star hotel), and 41% just want to be away from the hustle and bustle.

With the near and dear ones. In 2020, due to the quarantine many people were separated from family and friends for a long time. The desire to spend time together seems to have only grown stronger: 74% of respondents said they plan to use travel as an opportunity to meet with relatives. This may be also partly due to economic reasons, as this kind of trip is less costly.

Weekend trips. As many tourists fear that their plans might be again disrupted, the demand for short trips is expected to significantly increase. According to the study, 56% of Russians plan to make more short trips in 2021 compared to 2019 in order to minimize the risk of a holiday cancellation. 19% also noted that they would choose a weekend trip, as their first trip after the restrictions were lifted.

Gastronomic itineraries. People still want to explore the world, but 44% of tourists from Russia are still not planning a foreign trip when the covid restrictions are lifted. They plan to travel within Russia in some of the different regions that have recently become popular. They will use this opportunity to enjoy the local cuisine, which has become one of the main incentives. 29% of respondents want to try national dishes while on vacation.




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