Latest Market Insight

13 May 2021

Economic Update

Russia has raised interest rates in a bid to stem accelerating inflation which threatens to undermine economic recovery. The Central Bank hiked rates to 5%, an increase from the previous level of 4.5%. Russia’s economy is expected to hit its pre-coronavirus level in the second half of this year, meaning it would be one of the world’s quickest turnarounds.

Inflation has accelerated to 5.8% well above the bank’s official 4% target this year. The government is rolling out price caps for certain food products, in an effort to keep surging food bills under control, at least until the elections in September 2021. The rouble climbed on the news, hitting its highest level against the U.S. dollar in a month.

The slowdown in industrial output in Q1 (-1.3% YOY) is expected to be temporary, related to a high base effect; output will pick up in line with a solid revival in Q4 2020. Domestic and external demand are steadily improving, driving business confidence to its highest level since mid-2019. Agriculture, food, chemicals, and construction continue to lead the economic recovery. Regions with more diversified economies, such as Moscow, St. Petersburg, Tyumen, and Novosibirsk, are seeing a quicker rebound in B2B demand in 2021.

However, many Russian regions saw a considerable deterioration in finances in 2020, with 58 regions ending the year with a budget deficit. Top-performing regions have remained relatively resilient and retained their credit ratings. Regions which are more reliant on energy and mining production saw a much more significant impact on their finances, but a notable recovery in oil prices in 2021 should improve their fiscal situation. Russian regions which rely on manufacturing, agriculture, or have diversified economies have been more resilient and are likely to continue to outperform the rest of the country as the recovery gathers pace.

COVID-19 update

As of May 12, Russia confirmed 8,217 new coronavirus cases, Moscow registered 2,718 new cases (33% of all Russian cases), 734 new cases were registered in St. Petersburg (9% of all Russian cases), meaning that the capital is still the hub of the infection.

As on May 10, President Vladimir Putin said that some 21.5 million people have received at least one dose of a coronavirus vaccine in Russia so far, or 15% of Russia's population. However, independent analysis of regional figures shows around 21.5 million doses in total have been administered to 13.4 million individuals, which is only 9% of the population.

The World Health Organization and the European Medicines Agency launched the second step for the approval process of Russia's Sputnik V coronavirus vaccine on May 10. The final part of the approval of Sputnik V is due to be concluded in June. 

The Russian Direct Investment Fund (RDIF), which is funding and marketing the vaccine, has analysed the number of coronavirus cases among people who had received the Sputnik V vaccine and the wider population, and had found the jab is 97.6% effective which is notably higher than the 91.6% efficacy reported in peer-reviewed Phase 3 clinical trials.

The Russian authorities review the possibility of resuming flights to some countries

The Deputy Prime Minister and Head of the Operations for the fight against coronavirus confirmed the possibility of resuming flights with a number of countries from May 11. The resumption of flights on a reciprocal basis will be considered in Europe with Denmark, Bulgaria, Ireland, Austria, Luxembourg, Italy, Portugal, Poland, Cyprus, and Malta. In addition, resumption of flights are also being considered to Israel, Jordan, Morocco, Mexico, Moldova, Tunisia, Dominican Republic, Iceland, Saudi Arabia and Mauritius.

The possibility of increasing the number of flights to the following countries is also under consideration: Greece, Japan, South Korea, Kazakhstan, India, Egypt, Azerbaijan, Qatar, UAE, Serbia, Uzbekistan, Switzerland, Finland, Maldives and Cuba. The authorities will also assess the possibility of expanding the list of departure airports in Russia.

Greece has changed the rules of entry for Russians

On April 26, new entry rules came into force in Greece: Russians no longer need to undergo mandatory quarantine if they have both a negative PCR test and vaccination (including Sputnik) before arrival in Greece. Moreover, from May 14, 2021, the restriction on the number of Russian visitors will be removed and Russians will be allowed to arrive with either a negative PCR or a Sputnik vaccination certificate.  At the same time, the number of authorized airports has been increased from 3 to 9. Apart from Athens, Thessaloniki, and Heraklion, the airport of Chania in Crete, Corfu, Rhodes, Kos, Mykonos and Santorini are now open to Russian tourists.

Both the Greece Visa Application Centres and Consulates have been open to process visas. The Visa centres are currently operating in Moscow, St. Petersburg, Yekaterinburg, Krasnodar, Rostov-on-Don, Kazan, Nizhny Novgorod, Novosibirsk, Samara, Novorossiysk, Arkhangelsk, Murmansk, Petrozavodsk, Pskov.

Bulgaria opened borders for Russian tourists from May 1

Russians can now visit Bulgaria as of May 1, 2021. Travellers can enter Bulgaria if one of three conditions is met: a certificate of vaccination, a negative PCR test or an antibodies certificate.

Russians wishing to visit Bulgaria can already apply for a short-term visa in 22 Russian cities. Visa centres in another 37 cities will open soon.

Portuguese region of Madeira opens up to tourism

Madeira became the first Portuguese region to open for tourists from all countries, which means Russians can also travel there. Visitors do not need to be vaccinated against COVID-19 to enter Madeira. However, they have to complete a questionnaire on 12-48 hours before arrival as well as provide a negative PCR test made within 72 hours before arrival.

From May 12, the official visa center, accredited by the Government of Spain and the Consulate General of Spain in Moscow, resumed its activities for issuing short-stay Schengen visas.

Croatia visa centres issue visas to visitors travelling via travel companies

In April, Croatian announced the resumption of issuing visas on an individual basis to Russians visitors, including tourists. Now accredited tour operators and travel agencies can apply via the visa centres.

Expired Italian visas can be re-issued from May 3

According to the Consulate General of Italy in Moscow, Russians with Italian tourist visas (short-stay Schengen visa), which expired from 1 January 2020 to the present, can apply for a new Italian tourist visa from May 3. The validity period of newly issued visas will start from June 1, until then Schengen visa holders are not eligible to enter Italy or the Schengen countries.

S7 Airlines will fly from Moscow to several European cities on a weekly basis

S7 Airlines opens the sale of tickets for weekly flights from Moscow to Italy (Bologna), Greece (Heraklion), Germany (Hannover, Cologne), Ireland (Dublin) and Bulgaria (Varna) from early May, but not all flights are open to tourists.

Flydubai expands its route network in Russia to 11 destinations

Flydubai has announced the launch of additional routes, expanding its network to more than 80 destinations. In Russia, the carrier's route network will increase to 11 cities. The airline will start operating flights from Zhukovsky Airport in Moscow on May 12, from Novosibirsk on May 28, and from Perm on June 2.

92% of Russian travellers are ready to use electronic health passports

A study by Rebuild Travel Digital Health commissioned by Amadeus showed that 52% of Russians are ready to plan a trip within six weeks after covid restrictions are lifted.

The study identified factors causing concern among travellers regarding the privacy and security of the information used, as well as the convenience of using an electronic health passport. The respondents highlighted several positive aspects of an electronic health passport:

  • 79% noted that this will allow faster pre-flight procedures (check-in for a flight, passport control, etc.) at the airport and will reduce the number of face-to-face contact points;
  • 77% reported that it will open up even more travel destinations;
  • 76% think it will help them plan their trip faster.

Russian respondents identified three main reasons for their concern about the storage of personal data entered in a digital passport:

  • 50% noted the risks associated with hacks and personal data leaks.
  • 36% are afraid to enter data about their health, as they are not sure about its confidentiality.
  • 30% expressed their lack of confidence in the absence of global international standards for processing of personal data.






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