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21 January 2022
After a swift recovery from the coronavirus recession, the Russian economy a familiar set of challenges: sluggish growth, weak investment and underwhelming living standards in 2022. The World Bank estimates Russia’s growth potential at below 2% a year.
Prices by their highest levels in six years across the Russian economy in 2021. Inflation for 2021 came in at 8.4% — more than twice the country’s official target of 4% and the fastest rate of price increases since the 2015 economic crisis. Food prices alone rose by 10.6% over 2021. Real household disposable incomes have fallen by around 10% since 2013. As a measure to support pensioners — a key source of popular support for the Kremlin, the government decided to increase state pensions by 8.6% in 2022.
According to the Levada Center pollster, 44% of Russian respondents they expected the political situation to worsen in the coming months. Likewise, 49% said they expect the same for Russia’s economy. Only 18% and 16%, respectively, said they expected Russia’s political and economic life to improve in 2022.
The Russian ruble and share prices of leading Russian companies after Moscow appeared to rule out further talks with the U.S. and NATO. The ruble fell by almost 3% against the U.S. dollar. As of January 18th, the Russian currency is 76.04 against the U.S. dollar, and had fallen to 86.86 against the euro.
The new year with unrest in Kazakhstan which came as a surprise for most outsiders, as the Central Asian country has been a symbol of stability over the last 20+ years. The unrest was initially triggered by high increase in energy prices in the west of the country and low living standards. The local authorities say the peaceful protests were hijacked by other groups into violent protests, at the same time this resulted in a conflict between the elites, namely the all-powerful former President Nazarbayev and the current President Tokayev. To stabilize the situation, Tokayev sacked the former President Nazarbayev and his close associate Massimov who headed up the security services and invited the troops from the Collective Security Treaty Organization (CSTO) which is made up of 6 former Soviet countries including: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan, who were requested to send forces to help stabilize the situation in Kazakhstan and bring the short-lived unrest to a standstill.
The fallout from Kazakhstan’s turmoil on the business environment: domestic banking activity and stock markets were temporarily suspended, and bond prices rose in reaction, while oil output was briefly cut. Firms can expect consumer and business sentiment to remain restrained until the political situation stabilizes. More positively, however, the tenge has remained protected and stable, and the government is likely to raise social spending, increase utility subsidies, enact measures to slow price growth, and initiate some reforms to offset anger over a continued tight crackdown on protest activity. In addition, no sanctions are expected.
As for tourism sector,the Almaty International airport its domestic and international flights on January 13. The airport in Nur-Sultan is also fully operational for international and domestic flights.
Russia a new surge of coronavirus infections in the coming days as the Omicron variant sweeps through an under-vaccinated population. Omicron infections tripled during Russia’s extended New Year holidays.The state-run Gamaleya Institute, which developed Russia's Sputnik V vaccine, claimed in November that the vaccine is effective against Omicron and that it has begun developing an Omicron-adapted booster shot.
Only 46% of Russians are fully vaccinated against the coronavirus as vaccine skepticism has been high since the country launched its mass vaccination campaign in December 2020. Vaccination rates fell to their lowest-ever levels over the country’s extended holidays at the start of January, with only 70,000 jabs per day.
Meanwhile, Russian lawmakers to withdraw from consideration a bill requiring a QR-code health pass for entry to public spaces including public transport, internal flights and trains. The Deputy Prime Minister reported that Russia also plans to cut the isolation period from 14 to seven days for those infected with Covid-19. Nevertheless, the Moscow Mayor extended a requirement for businesses in the capital to ensure 30% of their employers were working from home.
The European Medicines Agency (EMA) is still awaiting additional documentation on Sputnik V before it can proceed with the vaccine approval process. The head of the World Health Organization (WHO) in Russia said the vaccine’s developers had submitted all the required information needed for its approval process, and further inspections will take place in February.
TRAVEL INDUSTRY NEWS
Maldives and Sri Lanka broke pre-Covid records for the New Year holidays
According to the tour operators, more Russians travelled abroad than within Russia during the recent New Year holiday period, which is a good indicator for international travel for the summer of 2022. Experts explained this as being partly due to the far greater number of flights available compared to the same time last year.
According to one of the leading tour operators, Intourist, the top destination was Egypt, followed by Turkey which moved Russia to the third position. Last year Russia was the leading destination, but at that time travellers were more afraid of COVID-19 and the prospect of infection abroad. Other popular destinations for the New Year holidays were the Caribbean countries of Dominican Republic, Cuba as well as Mexico and the United Arab Emirates, the Maldives and Sri Lanka.
While many destinations have practically recovered the pre-pandemic demand (excluding Egypt, which was closed until 2021), the Maldives and Sri Lanka broke the record of pre-crisis visitor numbers by at least two or three times. According to ART-TOUR, the resorts were almost sold out. Intourist reports that the sales volumes of the Maldives increased by six times compared to 2019, which is explained, in particular, by the fact that the tour operator did not focus on this destination before. The company also noted a decrease in the cost of a package to the Maldives compared to the pre-Covid year, which is attributed to the fact that the Russians began to choose cheaper accommodation, and due to the greater flight frequency.
Sri Lanka is now outperforming even such a tourism monsters as Thailand, previously one of the top winter destinations for Russians. Of course, this situation has developed due to the entry restrictions of many Thai resorts, but there are also wider variety of excursion programs in Sri Lanka which make it attractive.
As for Europe, there are very few options, so the success of open destinations is almost guaranteed. According to Intourist, Serbia exceeded the figures of 2019 five times, as it was one of the few skiing destinations open to Russians, Belgrade managed to establish itself as a city break destination. Bulgaria has also fully recovered, but the demand for Hungary was 20% lower than in 2019 due to visa quotas.
For the moment, the outlook is quite predictable and adjusted as new destinations are opened and restrictions are eased. Russians looking for a budget destination choose between resorts in Egypt and Turkey, or those destinations with direct flights and with competitively priced accommodation as well as simple entry rules.
Israel admits Russians vaccinated with Sputnik
Since January 9th, the Israeli authorities have allowed foreigners vaccinated with Sputnik to enter the country. However, visitors still need to complete a Passenger Locator form during the flight, have a negative test certificate and take a 2nd test on entering Israel. These conditions are similar to those required by Dubai and other popular destinations among Russians. Apart from Israel, there are another 75 countries that decided to recognize Sputnik in advance of the WHO approval which is expected by March 2022.
According to Russian travel experts, it is still too early to talk about a massive recovery of the tourist flow to Israel, except for pilgrims, and many Russians are unlikely to book far ahead their travel to Israel, since the country has repeatedly changed the conditions for entry for foreigners or even closed its borders, as happened at the end of 2021 due to the spread of the Omicron variant of Covid-19.
Australia recognized Sputnik V
The Australian authorities have now recognized the Sputnik vaccine, which means that vaccinated Russians can now enter the country, however, still not for leisure purpose. But this decision can be viewed as positive PR for the Russian vaccine an it is hoped that this maybe encourage other states to approve it shortly and accelerate its recognition by the World Health Organization (WHO) and the European Medicines Agency (EMA), which is now vital to reopen Europe for the summer of 2022.
Cyprus recognized Sputnik Light as a booster
Russians who have used the Sputnik Light Booster will be able to enter Cyprus as now the vaccine is approved by the authorities. For tourism purposes Cyprus recognize all vaccines approved by the European Medicines Agency, Sputnik V and Sputnik Light vaccine. This means that vaccinated Russians do not have to wait 2 weeks to enter the country after the booster and are exempt from arrival tests and quarantine.
Nordwind opens sales for new flights to Greece
Nordwind Airlines will launch direct flights from St. Petersburg and Rostov-on-Don to Thessaloniki (Greece). Flights from St. Petersburg will be operated once a week from May 3 and from Rostov-on-Don on a weekly basis from April 30.
Wizz Air Abu Dhabi announces flights to Abu Dhabi from Krasnodar
Wizz Air has extended its flight programme to Abu Dhabi and will now also include a regular flight from Krasnodar to Abu Dhabi. Direct flights will be operated from early February twice a week. Krasnodar will become the second Russian city from where the carrier plans to operate direct flights, flights have been running from Moscow since 15th Dec. Aeroflot and Etihad Airways also announced flight programmes from the capital of the Russian Federation in December 2021.
CONSUMER NEWS
More than 30% of Russians are travelling more frequently than in 2021
Tinkoff Travel analysts that in 2021 more than a third of Russians started to travel more often than in 2020. Russians are quickly adapting to the reality of living with Covid, they are changing their approach to travel planning and exploring new destinations in Russia and abroad. The study is based on the data from the Tinkoff Travel service received from 22,000 clients.
- In 2021, 30% of Russians travelled more often
More than a third of Russians travel more frequently in 2021. Another 30% travel as much as in 2020 but 20% traveled less and 11% have not travelled anywhere in the past or in 2021.
- 70% travelled inside Russia instead of going abroad
In 2021, demand has also changed within the country and Russians are discovering new destinations, and active leisure and sightseeing are gaining popularity.
The main reason for not travelling abroad is due to destination-imposed restrictions - 57% of respondents noted this as the main reason. Other reasons were the high probability of a flight cancellation (41%), the high cost of airline tickets (36%) and the requirement to be vaccinated with a recognized foreign vaccine (36%).
Of the leisure destinations, the Seychelles have had the largest growth rate in the spring of 2021, this is because they launched direct flights to Russia, do not require a visa and mandatory quarantine upon arrival. During the year, the number of purchases of air tickets to this destination increased by 12 times.
The demand for flights to Azerbaijan increased by 476% over 2021, while demand for flights to Croatia increased by 448% and to Uzbekistan by 236%, to Georgia by 223%, to Egypt by 214%, to Kyrgyzstan by 194%, to Armenia by 124% and to the Maldives by 87%. As for Croatia, the entry conditions for Russians were relaxed, but it was also used as gateway to other European countries that were officially closed to Russian travellers for leisure purposes.
Turkey, the UAE, Greece and Cyprus were the most popular leisure destinations in 2021 in terms of the number of flights tickets purchased. Demand increased by 50-70% compared to 2020 to these four destinations. The demand for holidays in the previously popular destinations in Southeast Asia saw a large decreased compared to 2020. It reduced by at least 50% to Vietnam and Indonesia.
Only 6% of the respondents managed to visit the countries which were closed for tourism. Most of them (40%) entered such states through another country, 25% had residence permits and 13% were vaccinated with a foreign vaccine.
- A third of Russians have changed their travel planning habits
According to the survey, 35% of Russians have changed their travel planning habits. If earlier they bought tickets in advance, now they purchase them very close to date of travel. The main reason is due to the high possibility of new covid restrictions, such as QR codes in hotels and restaurants, as well as flight cancellations. Only 2% of respondents answered that they used to buy tickets closer to the date, but now they are planning a trip in advance. Another 50% have not changed their habits, with 30% still preferring to buy airline tickets in advance whilst.
The survey showed that Russians are still afraid of the difficulties associated with traveling abroad. 34% do not plan to travel abroad in the coming months, and 25% doubt whether to travel at all.
However, 67% of those who plan to travel abroad are optimistic and do not plan to cancel travel plans due to the spread of the new Omicron strain of the coronavirus.
Where did Russians go on New Year's holidays?
Over the ten days of the New Year holiday period (Jan 1-10th), around 550 thousand Russians travelled during this period. According to the Association of Tour Operators of Russia (ATOR), about 300 thousand Russians went on domestic trips while 250 thousand travelled abroad.
Egypt was the leading destinations (up to 50% of all New Year's packages), followed by Turkey with 16%. The UAE and the Dominican Republic (each had 12% of the market), while Cuba and the Maldives were also popular.
According to the survey conducted by one of the top online daily newspapers Komsomolskaya Pravda, 3% of the respondents went on vacation visiting other cities and counties and another 3% went skiing, skating and snowboarding. However, the majority (65%) spend New Year’s holidays at home or visiting friends and relatives.
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