By Andrei Skvarsky.
A poll by a Deutsche Boerse-owned think tank suggests the average Russian was more pessimistic in October than in September about what overall business conditions would be like in Russia five years from now.
According to the returns of the poll, the latest in monthly surveys by MNI Indicators, a unit of Deutsche Boerse subsidiary MNI, of the situation in Russia from the standpoint of the average consumer, general consumer sentiment in Russia slid in October after edging up the previous month.
In terms of an evaluation system used by MNI Indicators, last month’s consumer sentiment was 18.8% down on October 2013. The proportion of Russians unhappy with their own financial status and with the overall business environment outweighed the proportion of those satisfied with both.
Russians had grimmer expectations than in September about their personal financial situation a year from today.
Curiously, they were happier with their current financial status, but this makes little change to what MNI Indicators sees as a rather grim and deteriorating general picture.
More people than the month before thought the next 12 months would be a good time to buy a car, but MNI Indicators attributes this to a government car scrappage scheme and argues that it remains an overall trend for car purchase willingness to decline, “pointing towards a continuation in the slump of the automobile industry”.
“The weak rouble, high inflation and economic sanctions weighed heavily on consumer sentiment in October, making consumers more pessimistic than ever before. There is nothing in the survey nor other recent data and events to suggest that this will change significantly anytime soon,” a statement from MNI Indicators quoted its chief economist, Philip Uglow, as saying.
“While the decision by Russia’s central bank to hike the key interest rate to 9.5% could help to rein in spiralling inflation and stem the slide in the rouble, it will also further restrict growth, potentially tipping the spluttering economy into recession. With the currency still under pressure there’s every possibility we’ll see further monetary tightening over the coming months.”
In emailed comments to EmergingMarkets.me, Uglow said that, with Russia’s economy balancing on the brink of recession, “we’ll be lucky to see positive growth this year and the economy continuing to stagnate in 2015”.
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