From Nezavisimaya gazeta, April 15, 2020, p. 4. Condensed text:
Russian President Vladimir Putin began a meeting on economic issues on Tuesday [April 14] by proposing to evaluate the new economic trends that have emerged because of the coronavirus pandemic. Russia’s economic situation is currently not all that rosy. After panic purchases of food and essential goods, Russians are switching to austerity [consumer habits], according to business surveys. That is not surprising: Many citizens expect either to lose their job or take a pay cut this year.
“The situation today is certainly unusual; that is completely obvious,” the president said at the start of Tuesday’s meeting. “So we will have to look at and carefully analyze the economic trends that have emerged in recent weeks, as well as talk about forecasts for the situation’s further development,” he added.
The head of state said the coronavirus epidemic has already impacted and continues to negatively affect business and entrepreneurial activity, as well as labor market trends. “Many cooperative, trade and economic ties were broken. Necessary restrictive measures forced enterprises to change their usual work schedule. The situation is especially difficult for small and medium-sized businesses and the service sector,” the president said.
In particular, he continued, retail trade in Russia dropped more than 35% in April. “This indicates how sharply, almost instantaneously, the market contracted,” Vladimir Putin said.
Another indicator of the worsening economy is energy consumption. “Unfortunately, this trend is also negative,” the country’s leader said during Tuesday’s meeting. In the first 12 days of April alone, electricity consumption decreased in annual terms by 5%. In other words, enterprises have started to use less power,” Putin said.
The head of state also noted the stagnation of lending to the real sector of the economy, which ultimately negatively affects companies’ investment plans, development programs and renovations.
He recalled that several measures to support the economy and businesses are already being implemented. In particular, the president commented that the total amount of funds allocated to minimize the negative effects of the coronavirus is approaching 1.2% of Russia’s gross domestic product. “At the same time, to prevent capital outflow, the tax rate on gains transferred to foreign accounts has been increased to 15%,” Putin said. . . .
But besides existing measures, new, additional steps are needed that can meet the new challenges, the head of state added. He recalled that last week, he instructed the government to prepare a business support program, putting particular emphasis on maintaining employment and personal incomes. . . .
Obviously, such measures are vital. For example, according to the forecasts of the Center for Strategic Planning (CSP), real wages in Russia could fall at least 12% in 2020. Experts base their conclusions on a survey of 1,300 companies from various sectors of the economy. “According to the results of a third wave of monitoring (which the CSP has been conducting since March – NG), businesses’ economic expectations are worsening throughout Russia in the context of the spread of the coronavirus in Russia and the extension of the self-isolation regime for a month, until April 30,” the experts emphasize. . . .
As noted, pay is already being cut, mainly at companies that have their employees now working from home. The CSP notes that in a week, the share of such companies increased from 26% to 38%. . . .
Russians are facing not only pay cuts but layoffs, the CSP says. According to the center’s estimates made on the basis of business expectations, the total number of unemployed workers in Russia will top 9 million in 2020. For comparison: Russia had about 3.5 million unemployed people in 2019. The overall unemployment rate will jump to 12% in 2020 from a modest 4.6% at the end of 2019, the CSP predicts. Incidentally, more chilling forecasts were discussed. For example, according to job recruiters, the unemployment figure could jump to a whopping 25 million if the quarantine is extended. . . .