Latest Market Insight
14 October 2020
By the end of 2020, Russia’s GDP may have declined by 4-5%, according to the Chairman of the Russian Accounts Chamber. Russia has suffered slow annual growth rates for almost 7 years, with the average annual growth rate being less than 1% from 2013 to 2019. A 3% growth rate is expected next year, due to the negative growth rates this year and the anticipated economic rebound in 2021 after this year’s decline. But slow growth rates are expected to continue from 2022-2023, principally due to lack of foreign investment in Russia.
On October 13, the Russian rouble increased its value by 1.4% against the dollar to 77 roubles, it also increased in value by 0.7% against the euro, to 91 roubles to the euro. The situation on energy markets may drive the sale of the rouble sales, Promsvyazbank’s chief analyst, said. Although the dynamics of emerging market currencies, which are gaining against the dollar, would help to further support the value of the rouble.
Russia confirmed 13,868 new Covid-19 cases on October 13 (+18% compared to the peak indicator in spring), bringing the official number of cases to 1.3 million. Starting October 12th Moscow employers are required to transfer 30% of employees to work from home until October 28th due to the coronavirus situation in the capital. Workers over the age of 65 and those suffering from chronic diseases are also required to work remotely. Extended autumn holidays are introduced at school.
The Russian economy should be able to weather the ravages of a second wave of the coronavirus better than the first, economists say, but uncertainty and volatility will remain for the foreseeable future. Russia records a sharp spike in new infections and Moscow starts to roll out new restrictions. This is starting to cause another economy slow-down, as well as fears amongst the business community of a second, potentially devastating, protracted shutdown. However, the Russian government insists that a full lock down is not on the cards, and economists are also not expecting Russia to issue a country wide stay-at-home orders or to shut down shops, factories, construction sites and restaurants.
From October 9, international flights will start operating from another 4 international airports in Russia, they include the cities of Samara (Volga region), Vladivostok (Far East), Grozny (Chechnya) and Krasnoyarsk (Eastern Siberia).
Until now international flights were only permitted to fly to the international airports of Moscow and Moscow region, St Petersburg, Rostov-on-Don, Kazan, Kaliningrad, and Novosibirsk.
Recently, AZUR air has announced regular flights from Novosibirsk to Istanbul two flights per week from the end of October, according to the winter schedule.
The Russian Prime Minister approved the list of states whose citizens will be able to travel to Russia using an electronic visa from January 1st, 2021, as part of a drive to attract more foreign tourists to Russia. The e-visa will be issued as a single entry for a period of up to 60 calendar days, the visitor can stay up to 16 days in Russia either for business or leisure purposes. The new online electronic visa is also valid for the participants of scientific, cultural, economic and sports events. The e-visa will cost 40 USD. A similar visa was previously introduced only for St Petersburg, Vladivostok, and Kaliningrad one year ago, but its use was limited to 8 days.
The list of countries whose citizens are eligible for the e-visa include 28 countries of the EU, namely Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden with the exception of the United Kingdom. Other non-European countries include Andorra, Norway, Iceland, the Vatican, Monaco, San Marino, Switzerland, North Macedonia, Serbia, and Turkey
The following countries are also on the list:
- Middle East - Bahrain, Kuwait, Iran, Oman, and Saudi Arabia.
- Asia Japan, India, Indonesia, China (including Taiwan), Malaysia, Singapore, South Korea, and the Philippines.
Airlines received new admissions abroad
Russian Aviation published a list of airlines and destinations that have receivedapprovals for flights in 2021. 30 destinations are on the list including the major airlines together with companies operating the charter flights. Among the destinations are Greece, Egypt, Israel, Spain, Italy, Cyprus, Malta, the Czech Republic, and others. However, the permit and updated approvals are not linked to border openings. This is a technical procedure that allows the airlines to schedule their operations as soon as flight restrictions are eased between Russia and the corresponding countries.
Tourists rely on the travel industry for up-to-date information
In a situation of uncertainty due to restrictions on foreign travel, Russians who are planning to travel seek the maximum support from travel agencies and other players in the travel industry, according to the research made by the analytical center of Profi.Travel.
About 42% of all tourists who went on vacation abroad in August - September 2020 noted the importance of professional assistance from travel agents when organising a trip. In comparison with a year ago, only 25% of Russian travellers noted the importance of a travel agency in providing information.
At the same time, in the premium segment, the importance of travel agent support was noted by more than 50% of respondents (30% in 2019).
Overseas vacations are still more in demand compared to domestic travel (50% and 18% respectively).
70% of Russians still want to travel abroad despite the pandemic
According to a survey by Amadeus, about 53% of Russians are ready to start traveling as soon as the border restrictions are lifted.
The survey shows that Russians are still enthusiastic about international travel, with 71% of respondents wishing to travel abroad, 69% are ready to travel to a different continent and only 35% want to travel within Russia. More than half of the Russians interviewed wish to have a vacation for two weeks or longer. Despite this, about 40% plan to spend less money on travel.
51% of Russians prefer to fly or to travel by car. According to Russian Statistical Committee, in the majority of cases Russians are ready to plan and organise their own trips. However, more than 40% of the respondents still prefer the help of a travel specialist. 21% of tourists need the help of a travel agency only on specifical issues. 21% require a travel company to assist them starting from the pre-booking stage to the end of the trip. 33% do not need travel agency support at all.
Business trips are planned last-minute, and their costs are reduced
According to online booking platform Tutu.ru, the lead time of business trips has decreased this autumn. There are more last-minute business trips with many travelers making a last-minute decision (2-3 days before the departure). Last minute travel accounted for 46% of business trips in the summer of 2019 vs. 55% of trips in the summer of 2020. Business trip expenses are recovering, e.g. in June-July companies cut travel expenses by 20-23%, in August by 12% and in September only by 6% compared to the same month last year.
The share of passengers in business class is stable and accounts for around 1% of all flights. In spring pring it was only 0.01% while in September trips in business class accounted for 0.57% of all travel. The share of one-day business trips without staying at a hotel increased by 5 percentage points (from 8% in 2019 to 13% in 2020).
Yandex internet search shows that summer started late this year
Due to the lockdown, the beginning of the tourist season has noticeably shifted this year, with international flights only starting in August which spurred user interest in travel, including outbound trips. According to Yandex search queries, 32% of Russian preferred sea & sun vacations, 18% - city tours, 11% - health & wellness, 9% - events, 8% - active leisure, 8% - business travel and 6% - ski holidays.
This summer, there were more requests for non-hotel accommodation. The interest in recreation centers, rented houses, cottages, camping, holiday homes, and guest houses has significantly increased by +12%. Hotels, on the other hand, have lost 37% of the searches compared to last summer.
Most of the current travellers are professionals with a higher education and a stable income. Men and women, on average, are equally divided among the consumers of various types of trips, but the proportion of men is higher for ‘bleisure’ trips and active leisure while women prefer sightseeing city trips. Travelling to attend an event and summer activity holidays are mostly preferred by young people aged 22 to 35 years.
Those who prefer beach vacations pay attention to the cost of the resort and the climate. Important factors considered by travellers going for a city break were the local culture and cuisine and various leisure options.
The most popular sources of information are search engines, city maps, and online reviews.
New destinations opening for Ukrainians
In early October, the Ministry of Health of Ukraine updated the list of countries included in the "green zone" for Ukrainians wishing to travel abroad. This list of countries now includes: the UAE, Hungary, Bosnia and Herzegovina, Monaco, Chile, Qatar, Croatia, Turkey, Egypt, Tanzania, Bulgaria, and Albania. Montenegro and the Czech Republic have now been moved to the "red" zone.
On September 30th, the Slovenian government opened up to Ukrainians, who can travel there without quarantine, but a negative Covid-19 certificate test is required.
Qatar will allow Ukrainians to visit from December 18th. Beach resorts in the United Arab Emirates symbolically opened before the start of the high season. The low-cost carrier Air Arabia will resume regular flights from Kiev to Sharjah from October 25th.
The Maldives can be reached by charter flights organised by the tour operator Kompas from late December to late January. Azur Air will start flights to the UAE from October 14th, to the Dominican Republic from October 16th and to the Maldives from December 25th.
Switzerland introduced quarantine for Russians
Switzerland has introduced a 10-day quarantine for foreigners arriving from seven countries, including Russia. This measure was introduced on October 12th.
People arriving in Switzerland from Russia and 6 other countries (Tunisia, Slovakia, Jordan, Iran, Georgia and Canada), as well as from several regions of Germany, Italy and Austria, are required to comply with a ten-day quarantine .Unfortunately, a negative test result does not provide an exemption to the mandatory quarantine, although, the quarantine can be completed at home or a hotel. There are large fines of up to 9.200 Euro for people not following the sanitary security measures.
Russia and Switzerland resumed flights from August 15th once a week, flights Moscow - Zurich and Moscow - Geneva of Swiss and Aeroflot airlines are operated.