Latest Market Insight
3 June 2020
According to the Ministry of Economic Development, during the first quarter of 2020, the GDP grew by 1.6% in annual terms, but in April, due to the introduction of Covid-19 restrictions, it fell by 12%. It is estimated that there will now be four-month decline in the GDP of 1.9%. In general, the Ministry of Economy predicts an overall 5% drop in the GDP in 2020. However, 2021 should see an economic recovery of up to 2.8%. The main economic impact of the pandemic crisis will be in the second quarter of 2020, when GDP will decrease by 9.5%, during the third quarter the economic decline will reach -6.3%, and in the fourth quarter - 5.2%. After the recovery growth of GDP in 2021 to an estimated 2.8%, the Ministry of Economy expects the growth rate to reach 3% in 2022 and 3.1% in 2023.
Russia expects a increase in unemployment in 2020, the average annual unemployment rate reaching 5.7% of the active population compared to 4.6% in 2019. In 2021, the average annual unemployment rate will only decrease slightly to 5.4% and in 2022 it should go down to 4.9%. The real disposable incomes of the population will drop by 3.8% due to a real wage decrease. In the second quarter, real income will fall by 6% in annual terms. By 2021, wages are expected to grow by 2.8%, and by 2% in 2022.
The Russian rouble passed another milestone on its recovery to pre-coronavirus level on June 1, as it dropped below 70 RUB against the U.S. dollar which is its highest level in almost three months. The currency’s recent stability stands in marked contrast to previous global economic crisis when the rouble suffered heavily due to its strong dependence on global oil prices.
From May 12, when the regions started to gradually lift restrictions, economic activity has reached 79% of the pre-crisis level, according to the Minister of Economic Development.
The Federal State Statistics Service estimate that the number of unemployed Russians in April rose to 4.3 million (vs. 3.5 million in March) and reached 5.8% - the highest for four years. In April 2020, unemployed increased by 21% compared to April 2019, and by more than 23% compared to March 2020.
The volume of services purchased by Russians in April fell by 38% compared to April 2019 and by 34% compared to March 2020. Retail sales fell by 23.4% compared to April 2019, including sales of food products which fell by 9.3% year-on-year, and sales of non-food products which fell by almost 37%.
After the end of the lock-down period on May 12, Russians began to increase their consumer spend, although this is still lower than the pre-epidemic period. The average spend in Russia grew by 18%, whilst online purchases have grown by more than 20%. During the self-isolation period, the share of non-cash payment increased by 8%: from 56% in February-March to 64% on May 21.
Update on COVID-19 in Russia and lockdown easing
Russia confirmed 8,536 new coronavirus infections on June 3, 2020. The country’s official number of cases reached 432,277 with 43% of the cases detected in Moscow. Nevertheless, the share of active cases in Russia is gradually decreasing all the time.
Rospotrebnadzor, Russia's consumer protection watchdog and the main governmental body responsible for regulations developed for the pandemic, said that Moscow is now ready to enter the first and second phases of lifting its coronavirus restrictions. This means that people can now go for walks and engage in outdoor sports. Non-food stores of up to 400 sq.m. can now also open for business, as well as some educational institutions can start to work again. The opening is allowed due to the lower virus transmission rate in Moscow, which is now 0.85.
Starting from June 1, non-food retail can open and part of the service sector can resume their work. Muscovites are also allowed to go for walks up to 3 times per week. On May 25, car sharing partially resumed (with a minimal rental time is 5 days), the mask regime and the digital pass regime required for travel in Moscow however remains.Ђ Back to journal