Deutsche Börse analysts: Russians increasingly worse off because of Ukraine

By Andrei Skvarsky.

A Deutsche Börse-owned research company says consumer sentiment in Russia has been going down steadily since the start of the year because of the Ukraine crisis, and that a survey taken last month showed a further decline.

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Household finances, short-term business conditions and the spending climate in Russia are all affected by developments in the neighbouring country and their international fallout, German bourse-owned MNI Indicators argues, predicting inevitable further economic woes in Russia this year.

Consumer confidence edged down by a further 0.7% from March to April, according to MNI Indicators, which bases its calculations on monthly surveys. This was the third consecutive monthly fall and left optimism almost 11% down since the start of 2014, the firm said in a report.

Each survey is based on a minimum of 1,000 telephone interviews in cities across Russia, with each interviewee selected randomly by a computer.

“Against a backdrop of stagnant economic growth and political concerns, the majority of respondents expected to see a worsening in business conditions in a year’s time,” MNI Indicators said.

Consumers were, moreover, “highly dissatisfied” with the current level of prices, and their expectations of future inflation hit a record high, according to the think tank. “Many respondents found their finances just enough for regular day-to-day expenditure but didn’t have enough to purchase big ticket items,” the company said.

The labour market deteriorated as well. Assessments of the employment market over the next 12 months went down again in April after a record low level in the first quarter, MNI Indicators said.

“With the economy flirting with recession it’s not surprising to see sentiment among consumers falling once again to a new low,” said MNI Indicators chief economist Philip Uglow. “The situation in Ukraine only makes matters worse and for the time being it’s difficult to see how Russia can turn the economy around.”

“With the central bank forced to tighten monetary policy further to deal with increased inflationary pressures and protect the rouble amid large capital outflows, economic growth will be squeezed further this year,” Uglow said.

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