Russia and Ukraine ‘Despair Index’ scores rise after turbulent year

(Business New Europe – bne.eu – Henry Kirby in London – June 18, 2015)

[bne Chart here http://www.bne.eu/content/story/bnechart-russia-and-ukraine-despair-index-scores-rise-after-turbulent-year]

Ukraine and Russia’s ‘Despair Index’ scores – a bne IntelliNews economic measure that combines inflation, unemployment and poverty – have continued to worsen throughout 2015 following a turbulent year for both nations.

Rocketing inflation in both countries has been the driving force behind the scores, with Russia’s year-on-year consumer prices (CPI) rising by 15.8% in May, with Ukraine’s CPI up 58.4% in the same month.

As the bne:Chart shows, the last two years have seen the EU and US Despair Index scores creep lower, with the last 12 months seeing Russia’s score move higher than both Western counterparts. Plummeting oil prices and continued Western sanctions have been behind much of this.

Under President Vladimir Putin, the poverty rate in Russia steadily improved to the point of being significantly lower than the rates in the US, EU and many Western European nations in the past few years. However, a recent World Bank report has cast doubt on the continuation of this improvement, forecasting a 2015 poverty rate in Russia of 14.2%, up from 11% in 2014.

The World Bank’s 14.2% forecast for Russia would mean its poverty rate is now marginally worse than the US’ 14.1%, pushing Russia’s Despair Index score higher than the Central and Eastern European/Commonwealth of Independent States (CEE/CIS) score of 33.6.

At the beginning of 2015, Ukraine’s Despair Index score had nearly tripled in two years, from an impressive 16.5 in 2013 to a worrying 46.5. Since then, the continued conflict in the country’s east has raised consumer prices further, pushing its Despair Index score past Bosnia and Herzegovina’s 61.3, making it the worst performing country in the CEE/CIS region.