Russia: Pessimism among consumers rises at the beginning of 2016
April 8, 2016
The wound in consumer morale deepened further in the first quarter of the year on news that millions of Russians sank into poverty in 2015 and that the economic outlook for this year is not promising. According to the Federal Statistics Service (Rosstat), the consumer confidence index fell from minus 26 points in Q4 2015 to minus 30 points in Q1 2016— the lowest level in a year.
Q1’s drop reflected that consumers were substantially more pessimistic regarding both the current economic situation and the economic outlook in the next 12 months. Households’ notable pessimism regarding the current economic situation, particularly their personal financial situations, can be explained by Rosstat‘s recent release of data that indicate that the number of Russians that fell into poverty in 2015 increased by 3.1 million to 19.2 million, which is the most since 2006. In a separate statement, Rosstat commented that real wages had declined 2.6% in 2015 from a year earlier, which marked the slowest pace of decline since wages began to shrink in late 2014. As households continue to endure the impact of Russia’s worst recession in two decades, consumers continue to be less confident that the overall economy will recover this year. Consequently, the consumer confidence sub-indicator of economic expectations fell to the lowest level since Q1 2009.
Author: Ricardo Aceves, Senior Economist