Russia’s Economic Crisis Finally Hitting Moscow and St. Petersburg, Survey Shows

File Photo of Cash, Coins, Line Graph

(Paul Goble – Window on Eurasia – Staunton, September 8, 2016)

Because incomes in Moscow and St. Petersburg were higher to begin with, residents of the two Russian capitals until recently had been able to absorb the impact of the economic crisis better than the other and poorer regions, one reason why there have been fewer economic protests in the politically sensitive capitals than on the periphery.

But a new ROMIR survey shows that the economic crisis is not hitting the relatively well-off not only in the provinces but in Moscow and St. Petersburg, and if that trend continues, it could trigger the kind of protests at the center that the Kremlin might have far more difficulty in coping with or might try to use a new foreign adventure to head off.

The ROMIR survey found that Russians in the country as a whole are spending two percent less now than they did four years ago and that the greatest decline over the summer has taken place in Moscow and St. Petersburg rather than in the provinces or in the capitals of federal subjects (romir.ru/studies/823_1473195600/).

In a commentary on the Svobnaya press portal today entitled “The Crisis has Come to the Capitals,” Aleksey Golyakov says that the ROMIR survey’s finding that the largest reductions in consumer spending over the last month – some ten percent — occurred in the Central Federal District (svpressa.ru/society/article/156022/).

“Moreover,” he writes, “for the first time in many years the number of Muscovites who say they are reducing their daily expenditures has risen significantly.” They report that they have cut back daily spending over the last month by 4.7 percent. In St. Petersburg, that figure was even higher – 5.3 percent.

Such cutbacks have been characteristic of residents of other Russian cities with more than a million residents, while those who live in smaller cities (those with fewer than 500,000 residents) cut back less in August, largely because they had cut back more than Muscovites or Petersburgers already.

Leonty Byzov, a senior scholar at the Moscow Institute of Sociology, says that these results show that even in the capitals Russians are beginning to recognize that things aren’t good and that the current crisis is not like the one of 2008-2009 and will not be solved without a radical change of course.

Until now, he continues, residents of the capitals didn’t feel this way because their higher incomes had provided them with a cushion; but that is rapidly disappearing. Society is still “demoralized” and doesn’t know what to do, he suggests, although as the crisis hits ever more people, some may decide to act.

One idea that is being floated in Moscow to address this situation is to print more money, but that will only produce more inflation, Nikolay Troshin of the Moscow Institute for Strategic Research says. Only genuine economic growth can lift the population back up; pumping up incomes via inflation without any other changes won’t.

Article also appeared at windowoneurasia2.blogspot.com/2016/09/economic-crisis-finally-hitting-moscow.html