The Kremlin said on Tuesday, the 24th of October, that Russia is not worried about possible further Western sanctions, saying the country’s economy has become resilient to the sanctions Russia has been suffering for years. In contrast, a survey found that almost half of Russians report that their salaries cannot cover basic expenses. The financial strain in the country has become worse since a large part of fiscal resources is being diverted to finance the war in Ukraine, reports Reuters.
The results of a survey of nearly 5 000 people conducted in October highlight Russia’s economic problems, which may cause concern for the authorities ahead of the presidential elections in March. President Vladimir Putin is expected to continue his more than two-decade term in office in these elections.
This year’s record low unemployment rate is a sign of Russia’s labour shortage, while the weakness of the rouble is fuelling inflation. Rates are expected to rise above 13% to counter the around 7% inflation rate expected at the end of the year, above the 4% target set by the Bank of Russia.
In the survey, only one in five (20%) Russians confirmed that their salary covers basic expenses, 36% said “yes, with difficulty” and
45% considered their income insufficient.
The survey shows that this 45% figure is a significant increase from 25% in 2021 and 39% in 2022. Before the Russian war in Ukraine in 2021, 36% considered their salary to be sufficient.
More than half of those who considered their income insufficient reported of at least 20 000 roubles (201 EUR) short each month.
According to Rosstat statistics,
the average nominal monthly salary received in July was 71 419 roubles (719 EUR).
Real wages in Russia are on a fast incline due to defence companies rushing to fulfil government contracts. However, various other sectors are struggling with keeping their workforce as they often cannot match the competitive salaries.
Forecasts by both the International Monetary Fund (IMF) and some domestic sources suggest that although the economy is expected to recover in 2023 after a 2.1% fall in GDP in 2022, Russia’s long-term prospects appear dim.
If the rouble strengthens more than expected and the optimistic economic assumptions do not materialise, analysts point out that the country could face a revenue shortfall in 2024, which would mean an increase in business taxes.
The European Union (EU) has imposed 11 sanctions packages against Russia since the Russian invasion of Ukraine. EU officials have indicated that
sanctions could continue for several years after the conflict.
In response, Russia argues that the sanctions have boosted domestic production and will not hold back its efforts to pursue what it considers vital national interests in Ukraine. Moscow argues that the Western powers are using Ukraine as a means to weaken and undermine Russia’s security.
In contrast, the Western powers reject this claim, describing Moscow’s actions as an unprovoked war of aggression.
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