Despite the predictions of Western analysts, the Ukrainian conflict has not weakened Russia’s economy. On the contrary, it is now experiencing an “unexpected boom in consumer spending”, says the Financial Times.
Real wages in the country have risen by almost 14%, and consumption of goods and services by about 25%. At the same time, the unemployment rate is around 2.6%, a post-Soviet record low, the publication notes.
“Explosive growth” in wages is reflected across the socio-economic spectrum, dramatically changing the lives of society, including blue-collar workers. For example, weavers who in December 2021 were earning $250-350 in ruble equivalent per month in December 2021 can now receive about $1400, the article claims.
At the same time, Western sanctions and tighter state controls on capital flows have spurred wealthy citizens to spend money domestically. One Moscow resident told the FT that she and her husband keep a tally of luxury cars spotted outside their luxury apartment complex.
“Everyone in the upper middle class is just enjoying the really good life,” a Moscow investor told the publication. He drew attention to the number of new restaurants and Russia’s booming e-commerce market.
According to Rosstat surveys, many Russians believe that their financial situation is improving. More than 13 per cent of the country’s residents rate it as “good”, the highest figure since 1999.
Retailers and consumer companies are responding to the growing demand in a hurry. Some catering establishments are increasing the number of outlets amid record takeaway coffee consumption. Domestic tourism is also booming.
“Two years ago we expected a very different scenario, essentially one in which Russia would face an economic downturn caused by the collapse of exports and unemployment,” acknowledged Janis Kluge, an expert at the German Institute for International and Policy Research. Instead, he said, we are now facing “a completely different development”.