Russian household incomes at 10-year low due to COVID-19
A fall of 3,5% in 2020 brought real disposable incomes of Russians to a minimum last seen at the beginning of the 2010s. The good news is that the country’s overall economic situation is quite good, as industries survived the severe pandemic year better than expected.
The coronavirus pandemic pushed Russian living standards to their lowest level in a decade, says The Moscow Times adding that the country’s wider economy was one of the world’s best performers last year. According to new economic data published by Russia’s Federal State Statistics Service (Rosstat), real disposable incomes of Russian households dropped by 3,5% in 2020. Thus, they are now more than 10% below levels recorded in 2013, which is considered the last year of solid growth before the Kremlin prioritised economic stability.
The coronavirus pandemic has put Russian families into their most vulnerable financial position in the last ten years. In 2020, the number of Russians classified as living in poverty increased by 400,000 and reached 19,6 million. However, economists admit that the government’s well-targeted anti-coronavirus financial support helped soften the blow for the poorest families.
Meanwhile, Russia’s economy as a whole continued to beat expectations. According to economic data by Rosstat, a range of industries registered smaller declines in output last year than analysts had predicted. Construction and agriculture registered growth in 2020, while industrial production overall fell by 2,9%. The retail sector, which was hit hard during the nationwide lockdown last spring, fell by 4,1%. The consumption of paid services (spending in restaurants, bars, hairdressers, etc.) suffered even more losing 17,3% over the year.
Nonetheless, Russia survived the first year of the coronavirus crisis will fewer losses than most developed economies and better than many expected. The official unemployment rate fell below 6%, although some economists tend to attribute this to the government’s cutback in unemployment benefits than an increase in new jobs. The economic contraction is also expected to appear one of the world’s smallest, as the second lockdown wasn’t imposed despite growing infection and hospitalisation virus rates. However, the recovery is also expected to be among the slowest with Moscow reverting to a policy of austerity in a bid to quickly recover its lost revenues.