Latest Market Insight

24 March 2021

Economic Update

Russia’s annual growth rate is unlikely to surpass 3% in 2021-2023. This is partly due to the sluggish global recovery and further lock down measures in many countries. For this reason, Russia’s growth rate may only reach 2%.

The high rate of inflation continues to impact the price of food which has increased by almost 8%, which is the highest rate for 5 years. Apart from food, many other basic goods have also increased in price, which is always a highly sensitive issue in Russia. The high inflation is caused by an increase in global prices, a weak ruble and other more long-term factors such as falling living standards which has been exacerbated by the recent Covid crisis.

According to an independent survey from the Levada Center, when asked to identify the country's main problems, 58% of Russian respondents selected an increase in prices. This is decrease from 2018, when 75% of Russians said that increased prices was the main concern. 40% said poverty was one of the country's main problems, followed by 39% who believe that corruption is the main problem. 36% of respondents were worried about unemployment and 26% about class divide. Although social and economic issues dropped in double digits in recent years, there is a rise from 24% to 39% for the countries concern about corruption.

A Nielsen survey found that 53% of Russian said they were worse off as a result of the covid epidemic, which is twice the level recorded by the same survey in September 2020, whilst the global average for feeling worse off is 46%. However, this has been dismissed by the Russian Government as it implies that Russians have suffered more financially than households in other countries. Official government statistics show real disposable incomes, (a closely watched indicator of overall living standards), dropped by 3.5% in 2020, hitting its lowest level in a decade. To help cope with the current discontent, Russia is considering the introduction of US style food stamps.

COVID-19 update

On March 23, Russia confirmed 8,457 coronavirus cases, a 20% drop since early March. Moscow registered 1,042 new coronavirus cases, a 19% reduction over the month. As of March 21, over 8 million vaccinations have been administered.

According to the online travel service, 20% of respondents are ready to get vaccinated in order to facilitate international travel. Of those interviewed, 10% are planning to travel to Europe, 4% want to go to the seaside, and 8% are ready to travel to any destination. In October 2020, 19% were ready to be vaccinated. 52% are still skeptical about vaccinations while 18% have already been vaccinated.

A Swiss pharmaceutical company has concluded a deal with the Russia Direct Investment Fund to start the production of the Russian vaccine Sputnik V. However, the European Medicine agency has to first approve it, which may take several more months. However, this does not prevent individual countries using the Sputnik vaccine at a national level, which has already happened in Hungary and Slovakia, while the Czech Republic is also interested in purchasing the Russian vaccine. 

Aviation news

From March 17th, Latvia resumed air traffic with third countries, including Russia.

The low-cost airline Pobeda will resume flights from Moscow to Bergamo from March 26th which will be operated on Fridays.

In April-June, S7 Airlines will open flights to Italian Catania and Naples. Flights to Catania will start from April 20th, and from June to Naples. S7 will also start flights to Croatia - to Pula from April 25th and Dubrovnik from April 26th. Officially these flights are only available for citizens of the destination country, EU countries or people with a residence permit.

Air France has resumed flights from Paris to St. Petersburg. The first flight started on March 20th and will continue with weekly flights scheduled each Saturday.

Greece will increase the entry quota for Russian tourists

From April 5th, Greece will increase the entry quota for Russian tourists from 2,000 per month to 4000 per month. Greece opened its borders to Russians from September 7th allowing 500 Russians per week to visit the country. This was initially planned as a partial opening of the country but then was repeatedly extended.

Tourists can enter Greece only via 3 airports:  Athens, Thessaloniki and Heraklion (Crete) and must provide a PCR test within 72 hours of arrival.

The Director of the representative office of the Greek National Tourism Organization in Russia noted that these restrictions will be lifted completely from May 14th.

Cyprus opens for Russian tourists

Russians will be able to enter Cyprus without quarantine from April 1st but will be required to register for a special FlightPass 24 hours before departure, as well as to provide a negative PCR test before flying. A second test upon arrival is also required, which costs around 30 euros.

Russia does not currently have flights to Cyprus, but Russian carriers are ready to immediately launch flights to Cyprus as soon as the borders open, as flight permits were issued in early March to several airlines including Royal Flight, PEGAS fly and UTair who will be able to start flying from Moscow to Larnaca. Also, Nordwind and Rossiya have permission to fly from Yekaterinburg to Larnaca. Nordwind can also fly from Nizhny Novogorod to Larnaca. Aeroflot will fly from Moscow to Paphos.

Ural Airlines has permission to run charters from Perm, Krasnoyarsk, Astrakhan, Mineralnye Vody, Nizhny Novgorod and Kaliningrad to Larnaca. As well as the possibility to fly to all the cities mentioned plus St. Petersburg, Kazan, Moscow, Yekaterinburg, Rostov-on-Don, Ufa, Novosibirsk, and Samara to Paphos.

In the pre-pandemic years, Russia was one of the leading source markets for tourist arrivals in Cyprus. According to official statistics, Russians made more than 900 thousand trips to Cyprus in 2019. In 2020, this number fell to 51 thousand arrivals. According to Cypriot statistics, about 400 Russians entered Cyprus in February 2021. Compared to the same period in 2020, the Russian flow decreased by 95%.

Most Russians are increasingly confident about international travel

The online travel agency OneTwoTrip discovered how Russian travellers feel about traveling abroad at the moment, as more countries are opening borders and resuming flights with Russia. It turned out that 85% of the respondents have already considered the opportunity to spend their spring vacation abroad. Most people are generally optimistic about the future: 82% of Russians think that new destinations will be available for travel in March.

Opinions on how to plan foreign trips are split equally: 50% are planning to go abroad independently, while 50% prefer to buy a travel package from a travel company.

63% plan to stay at a hotel, while 37% are planning to rent an apartment. When it comes to sightseeing, 68% of respondents will explore the destination themselves, while 32% will join a group excursion. Many tourists are still a somewhat cautious with 62% stating that they are not yet ready to take their children to another country, and if they travel abroad, they will fly without children.

Where and what kind of trips are Russians planning for 2021

The number of Russians willing to travel in the next 3 months has almost doubled. According to the most recent Ipsos data (poll February 26 - March 2, 2021) 69% of respondents plan to travel in Russia and another 36% - abroad (with some people planning both domestic and international travel). In May 2020, Russians were much more pessimistic (only 36% of respondents planned domestic travel with only 20% willing to travel abroad).

As for the tourist preferences in 2021, 70% choose beach vacation (for both domestic and international travel), this is due to the long Russian winters, which people usually want to escape from.































According to Ipsos, at the beginning of March, only 16% where not planning to travel at all. Of those not planning to travel, 42% were afraid of getting the coronavirus, the second most important reason was the high cost of travel (37%). The next reason was an unwillingness to travel in "new reality" (29%), which implies increased bureaucracy, such as obtaining negative PCR tests. Only 10% of Russians who are not planning to travel (2% of the total number of respondents) are still waiting for their favourite destination to re-open after the pandemic. This suggests they are open to new suggestions and have long term implications for Southern European countries that are not planning to open for Russian tourists, so they may lose them in the long run, as the Russians discover other destinations. It also provides an opportunity for destinations that are planning to open to win more business.

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