Latest Market Insight

7 October 2021

Economic Update

The Russian Prime Minister reported that Russia returned to its pre-pandemic GDP in June of 2021 but it is still too early to talk about a complete recovery from the impact of coronavirus. Besides, the World Bank has recently increased its GDP growth forecast for Russia to 4.3% in 2021 up from 3.2% which it projected earlier in the year. However, for 2022 and 2023 growth rates were revised down to 3.3% for 2022 and 2.3% in 2023.

On September 10, the Central Bank raised interest rates to 6.75%. This was the fifth increase this year. The aim of the interest rate hikes is an attempt to control the rate of inflation, which reached 6.8% in August, the highest rate for 5 years. The Central Bank would like to bring it down to 4%.

The increase in the interest rate is expected to lead to an inflow of foreign capital into Russian and to strengthen the value of the Rouble. This will make imported goods more affordable and eventually reduce inflation. The ruble is expected to remain stable by the end of the year in the range of 85-88 Roubles to the euro (72-75 Roubles to the dollar).

Unemployment continues to decline in July and fell to 4.5% for the first time since September 2019.

COVID-19 update

On October 6, Russia registered 25,133 covid infections, the highest number since the end of July.  There are 3,589 new cases in Moscow and 2,187 in St. Petersburg. While the infection rate being kept under control in the two capitals, the Russian regions are under great pressure.

Russian officials have warned about the country looming fourth wave of the coronavirus. The Head of the Rospotrebnadzor, the health watchdog leading the country’s response to the virus, said the growth in new infections was “intense” in 36 of 85 Russian regions.

The Deputy Prime Minister said that the federal government recommended the introduction of QR-codes for attendance at large events in the Russian regions. Perm region and the Republic of Udmurtia have already announced QR code requirements for public events, cinemas, theaters and cafes starting in early October due to a large upswing in Covid-19 cases and deaths. Orenburg region requires PCR tests for all visitors, and the Vologda region requires a QR codes to visit restaurants, cafes and museums.

The World Health Organization (WHO) has suspended its approval of Russia’s Sputnik V coronavirus vaccine, pending a fresh inspection of at least one additional site where the vaccine is being manufactured. Russia has completed Phase 3 trials of its Sputnik V vaccine, the Minister of Health announced, over a year after Moscow touted the jab as the world's first authorized coronavirus vaccine. It is hoped that WHO will approve the vaccine by the end of November.

Russia resumes flights with more destinations

From 5 October, Russia resumed flights with Goa and Tenerife, as well as Denmark, New Zealand, Peru and South Africa.

Two flights a week are planned from Moscow to Tenerife, while for Goa, there will be one flight per week from Moscow, as well as direct flights from St. Petersburg to Delhi.  Also, there will be two flights a week from Moscow to Wellington (New Zealand), Lima (Peru), Cape Town, Johannesburg (South Africa), as well as Copenhagen (Denmark).

In addition, the number of flights to the UAE, Japan, Kyrgyzstan, Uzbekistan, Bahrain, and Tajikistan will increase. The flight ban on Tanzania have been extended until November 1.

S7 announced the launch of its low-cost carrier

S7 Airlines announced that the new low-cost airline would be called Citrus. The name reflects the airline's goal which is to connect Russian cities (Cities of Russia),” according to the explanation of S7 representatives.

Ticket sales for Citrus flights are planned for the spring of 2022, and the first flights will start in July 2022. With a focus on direct regional routes,Citrus will offer point-to-point interregional service connections between second and third-tier cities, mainly in central Russia. Citrus is expected to carry around a million passengers in its first year of operation with the aim of reaching 6-7 million passengers by 2024. It will be a major competitor to the only budget Russian airline called Pobeda Airlines, part of the Aeroflot Group.

Seychelles registered a record number of Russian arrivals

20,000 Russian tourists visited Seychelles during the first nine months of 2021, a 133% increase compared to pre-pandemic statistics.  In the past years, there were 13,000 Russian arrivals per year.  In 2021 Russia became the #1 source market for Seychelles, leaving behind traditional markets such as the UAE (16,000 tourists in Jan-Sep 2021) and Israel (8,600 arrivals). 

Russians prefer 4* or 5* international hotel brands, with half-board accommodation option.  The cost of a package in a 5* hotel is between 4,000 to 5,000USD per person.  Aeroflot has 4 flights a week to the Seychelles.

ANEX Tour expands its programme to the Dominical Republic

Anex Tour launches the Dominican Republic from six regions of Russia with its strategic partner Azur Air. There was an expansion of the flight program to the Dominican Republic from October 1, with flights to the Dominican Republic operating from six cities: St. Petersburg, Yekaterinburg, Kazan, Novosibirsk, Ufa and Rostov-on-Don.

The travel industry is optimistic that the Dominican Republic will be very popular with travellers from the regions in the coming winter, since Thailand may not open fully for tourism traffic, and tours to Egypt on scheduled flights cannot compete in terms of price-quality ratio.

Vaccination trips

While the WHO and the European Medical Agency delay Russian vaccines registration, Russians who want to resume international travel are getting vaccinated by internationally approved vaccines by travelling abroad. 

Tour operators reported an increase in requests for vaccination trips to Europe.  Serbia is the most popular vaccine trip destination, as the vaccine is free for foreigners, regular flights go from Moscow and St.Petersburg and there is no visa requirements. In Germany, Pfiser/Biontech vaccination service cost 1160 euro for two doses, while the one dose Johnson&Johnson costs 870 euro.  The vaccination is sold only as a part of a package with travel and accommodation.

Recently, Russian Express announced the sale of vaccination trips to Croatia where Russians can get vaccinated with most international vaccines. Travel packages start from 350 Euro per person for 4 nights. The price includes airfare to Croatia, hotel accommodation with meals, transfer and assistance with the vaccination, and medical insurance. Since Oct 1st Croatia has simplified the entry rules for Russians who are vaccinated with Sputnik V, they no longer require a PCR test for entry.

September is the most popular months for an Autumn trip

In a recent survey, 52% of respondents said that September is their preferred month for an Autumn trip, whereas 35% prefer October while only 14% mentioned November, even though there is a half-term holiday at the end of October and early November. September is preferred due the following reasons: the weather is better (still sunny enough to visit a beach) (45%), fewer people in popular locations (23%) and a variety of leisure options (12%). Among the reasons for a vacation in October are the lack of crowds at resorts (28%), whilst 21% believe it is less expensive to travel in October. Trips in November are mainly for personal or family related travel (35%) or because of the lower levels of visitors (28%).

In the Autumn, Russians like to visit southern cities for vacation (33%), for 27% there is no preferential location, whilst resorts are of main area of interest of 15% and city breaks are of interest to 12%. 11% choose a destination depending on its cost. Among the currently available foreign destinations available, consumers still prefer Turkey (35%) as the best destination for an autumn break, followed by Egypt (9%), Greece and Cyprus scored 5% and Montenegro scored 3%.




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