Daily Management Review

Pandemic Effect: Second Quarter Real Disposable Of Russians Dropped Most In 20 Years


Pandemic Effect: Second Quarter Real Disposable Of Russians Dropped Most In 20 Years
The novel coronvirus pandemic is hitting the Russian economy quite significantly.
According to reports, in the second quarter of the current year, the real disposable of Russians have dropped by its highest level in 20 years. This was a result of the shrinking of the Russian economy by 9.6 per cent year on year as the pandemic tanked demand for oil and the suppressed oil prices hitting the economy,
One of the most socially sensitive issues in Russia has been the disposable income and this economic measure has been touted and supported by the country’s President Vladimir Putin.
It is expected that the Russian economy will contract by as much as 6 per cent this year.
According to an announcement made by the state statistics service Rosstat, there was a drop of 8 per cent year on year in the real disposable income of Russians in the April to June quarter. The state agency added that there was also a drop of 9.4 per cent in Russia's industrial output in June compared to the same month a year ago.
According to the data on Rosstat's website, this drop was the steepest quarterly decline of the income since 1999.
The Russian economy ministry said in a separate statement that the Russian economy shrank by 9.6 per cent year on year in the second quarter of the current year when the economy and economic activities were ravaged by the restrictions imposed by the government to prevent the spread of the novel coronavirus pandemic. The ministry said that the economy had grown by 1.6 per cent in the January to March quarter.
In June however, the Russian economy was 6.4 per cent smaller than in the same month a year earlier. In May, the contraction in the economy was even sharper – revised to 10.7 per cent. That was the month when the country was partially locked-down in order to prevent the fats spread of the pandemic.
"The main factor for recovering economic activity in June was the continuing removal of quarantine restrictions, which had the most positive effect on the market," Polina Kryuchkova, deputy economy ministry, said in the statement.
According to recent reports, signals of a willingness to reduce the key lending rates have been made by the Russian central bank. The current key rate is at 4.5 per cent. If there is a further cut in the key interest rates of the country, it would mark the fourth such cut in the country so far this year.