Latest Market Insight

21 July 2021

Economic Update

The Economic Development Ministry has upgraded the outlook on Russia’s GDP growth rates for 2021 to 3.8% compared with 2.9% expected in April, while the economic growth rates for 2022-2024 remained at 3.2% in 2022 and 3% in 2023 and 2024.

Although the Russian economy continued to grow in May and June reaching pre-pandemic levels in Q2, this was mainly due to a high growth in lending. There was also evidence of the a pause in the ongoing recovery in consumer demand due to the uncertainties for the 3rd wave of covid which is undermining business confidence.

Annual inflation in Russia stood at 6.5% in June. The Russian Ministry for Economic Development has downgraded its outlook for inflation to 5% by the end of 2021.

The Ministry also notes a slower than expected recovery of real disposable income in the first quarter of this year, which is why it leaves the outlook on its growth unchanged at 3% for 2021. The Russian Statistical Service report that 75% of households find it difficult to buy basic necessities. Russian households need at least $825 to make ends meet. However, the research shows that the situation has improved compared to 2018 when it reached almost 80%. About 25% of families live without financial difficulties.

The share of Internet purchases paid by cards declined to 40% in the first half of 2021 from 66% in the similar period of the last year, according to the Russian Standard Bank research. Russians started making more Internet purchases by cards but with smaller amounts.

COVID-19 update

On July 19, 24 633 new cases were registered in Russia, 4,007 new cases in Moscow (16% of all cases registered in Russia) and 1,938 (7.8%) in St. Petersburg. Russia has now overtaken France as the country with world's fourth-highest confirmed Covid cases, according to the World Health Organization.

From July 7, Russians returning from overseas travel are required to self-isolate until they test negative for Covid, vaccinated or recently recovered Russians are exempt from the rule. Starting July 19, Moscow restaurants will no longer require a QR code proving they are vaccinated or have a negative test results in order to dine indoors. Most service sector businesses in Moscow met the deadline to ensure 60% of their workforce received a first dose of a corona vaccine. St. Petersburg authorities have banned gatherings of more than 75 people from July 13. Case numbers have spiked in Russia's second-largest city since it hosted seven matches in the European football tournament. Russia’s Black Sea coastal resorts including Sochi will require tourists to be vaccinated within three days of arrival starting on August 1.

Russia lifts a ban on charter flights to Egypt

By presidential decree, Russia has lifted the ban on charter flights to Egypt, introduced in 2015 due to a terrorist attack on a Russian airline which flew from Sharm el-Sheikh to St. Petersburg and crashed killing all passengers. Russians who want to visit Egypt, must provide a negative PCR test in English with a QR code, taken no earlier than 72 hours before the trip.

However, despite the ban has being lifted, RosAviation has not yet  given permission to fly to Hurghada and Sharm el-Sheikh. A large number of Russian airlines have applied permission to fly to Egyptian resorts, including: S7 Airlines, Rossiya, AZUR Air, Nordwind, NordStar, Ural Airlines, IrAero, Azimut and, I Fly, Yakutia, but so far, no airline has been granted permission to operate flights to the Egyptian resorts from different Russian cities.

Meanwhile, the Egyptian authorities have announced the easing of COVID-19 restrictions on leisure and entertainment. Thus, the Ministry of Tourism and Antiquities of Egypt decided to lift the ban on the operation of theaters, amusement parks, casinos, concert halls and nightclubs.

Increased flights frequency to European destinations and near East destinations

From July 24, Russia increased the frequency of flights to Austria, Belgium, Bulgaria Hungary, Lebanon, Croatia and Ethiopia.  For the travel industry the most important flight increases are to Bulgaria (a popular summer destination for Russians). The current two flights per week from St. Petersburg to Vienna and Brussels will increase to 2 flights a week, while the number of flights from Moscow to (Bulgaria):  Sofia, Varna and Burgas will increase from 4 to 7 flights per week. The flights frequency from St. Petersburg to (Bulgaria): Sofia, Varna and Burgas will increase to 4 per week, and there will be weekly flight from Ekaterinburg to Varna.

The Number of flights from Moscow to Budapest will increase to 4 per week, and flights from St. Petersburg will fly twice a week. Flights from Moscow to Thessaloniki and Heraklion (Crete) will increase from 5 to 7 per week. While flights to Split and Dubrovnik will increase from 2 to 5 per week, and to Zagreb from 2 to 3. There will also be an increased in the number of flights to Lebanon, Beirut and Addis Ababa, Ethiopia.

Russia resumes air connection with France and Czech Republic

From 24 July, Russia will resume flights from Moscow to Paris and Nice on a reciprocal basis, there will be 4 flights per week to each city, there will be 2 flights a week from St.Petersburg to Paris and Nice, 2 flights per week on each route.

Four flights per week is planned from Moscow to Prague.

Despite the flight resumption, Russian leisure tourists cannot visit France or the Czech Republic, as those countries do not issue visas for leisure purposes to Russian travellers, travel is only permitted if there is a significant reason for travel.

Madeira allows entry to Russians vaccinated with the EpiVacCorona vaccine.

The government of the Portuguese island of Madeira is expanding the list of eligible vaccines for entry to the island. The list includes vaccine that have not yet been approved by the European Medicines Agency, including the Russian EpiVacCorona, as well as SinoPharm or Sinovac, Covaxin and Sovereign. However, tourists are still required to submit a PCR tests upon arrival and on the fifth or seventh day of stay. The mainland authorities of Portugal have approved only four vaccines - Pfizer, Moderna, AstraZeneca and Janssen. Since May 25, Russia has resumed flights to Lisbon, but the flights are not for open to leisure travellers. The "green corridor" is valid only for Madeira, which can be reached with a transfer via a 3rd country.

SriLankan Airlines plan to return to Moscow after six-year absence

Sri Lankan Airlines will resume nonstop flights to Moscow at the end of July after an absence of more than six years. The new service will offer a weekly scheduled flight between Colombo and Moscow’s Domodedovo from July 30. Fully vaccinated tourists can enter Sri Lanka without the need for a 14-day quarantine, this includes those vaccinated with the Russian Sputnik V vaccine. Tourists are still required to provide a PCR test upon arrival and on the 7th day of their stay.

Slovakia is open for Russian tourists

From July 19, the Slovak authorities have decided to allow all vaccinated tourists to enter the country without a two-week self-isolation. The vaccinations which are accepted are: "Pfizer", "Moderna", "AstraZeneca" and "Sputnik V". Also, quarantine can be avoided by those who have been ill with Covid-19 and received the first dose of vaccination within 180 days after the disease.

EU has added Armenia, Azerbaijan, Moldova and Ukraine to the EU "Green list"

On July 14, the EU added Armenia, Azerbaijan and Moldova in the "green list" of countries and recommended to lift travel restrictions for Ukrainian. The final decision is up to the member states. Thus, Belgium became one of the first member states to remove entry restrictions for all travellers from Ukraine.

The current  EU Green list now includes 23 states from outside of the EU: Albania, Armenia, Australia, Azerbaijan, Bosnia, Brunei, Canada, Israel, Japan, Jordan, Lebanon, Montenegro, New Zealand, Qatar, Moldova, North Macedonia, Saudi Arabia, Serbia, Singapore, South Korea, Ukraine and the USA. Chinese will also allowed entry but this is subject to reciprocity, so will not happen immediately.

Ukrainian tourists are using travel companies services much less than in 2020

In 2020, 2.3 Million Ukrainians used the services for travel professionals (tour operators and travel agents) which is 2.5 times less than in 2019, according to the State Statistics Service. 90% of all packages sold are outbound trips. In 2021, operators sold 1.22 million travel packages.

The main travel purpose of those tourists who used the services of tour operators in 2020 was leisure and recreation (95%), business trips and studies (3%) and 2% for medical treatment, specialized tourism, sports and other purposes.

The most popular destinations where Ukrainians bought travel packages to include: Egypt (82%), Turkey (5%), UAE (4%), Montenegro (3%), Dominican Republic (2%), Bulgaria (2%) and Albania (2%).






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