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The public opinion on the economic situation in Russia has hit its lowest point since October 2022.
Putin’s war in Ukraine is not just hurting the Russian forces, which are closing in on 1.4 million casualties since the beginning of the invasion.
Waging war is expensive, and to counter the increasing deficit in the federal budget, the Kremlin has imposed tax hikes. Inflation sits at 5.6% annually, meaning the average Russian is increasingly struggling to make ends meet.
The Kremlin is trying to stay calm, at least when addressing the public about the situation, but a new survey shows that the Russian public is not buying it.
No light at the end of the tunnel
A new survey by the Public Opinion Foundation, commissioned by the Central Bank, shows that public optimism regarding the Russian economy has completely evaporated.
The country’s economic outlook has now hit its lowest point since October 2022, The Moscow Times reports.
For five straight months, long-term views have nose-dived into near-total pessimism. In fact, public sentiment has not looked this bleak since the earliest days of the war in late February 2022.
The reasons behind the gloom are easy to spot on supermarket shelves. A recent tax increase caused prices to spike earlier this year, squeezing family finances. More people now expect their personal finances to worsen rather than improve.
A split economy
Behind the data lies a stark reality. The nation’s gross domestic product dropped by 0.2% in the first quarter, marking the first economic contraction in three years.
At the same time, the entire economic landscape is splitting into two starkly different worlds. The military sector is booming due to heavy government contracts.
Meanwhile, according to the Russian Academy of Sciences, 19 out of 24 civilian manufacturing industries are actively shrinking.
Instead of firing people, struggling companies are keeping workers on the books. They are hoarding staff. Employers are simply waiting for better days to return.
As a result, wages have stalled.
Stretching every ruble
The think tank CMAKS calculated that real disposable incomes dropped by 1% compared to the previous quarter. This marks the first major income decline for citizens in three years.
Right now, the average citizen takes home a median disposable income of just 27,500 rubles. Another research group, the Center for Macroeconomic Analysis and Short-Term Forecasting, called this drop a “formal correction” and expects growth to return. Yet, the group noted an “unexpectedly protracted and profound” decline in public confidence that is actively shaping consumer behavior.
Fearing the worst, families are tightening their spending. Surveys by the Levada Center show consumer confidence sinking fast. People are choosing to save rather than spend, and that lack of consumer spending is dragging the economy down.
Sources: Public Opinion Foundation, Central Bank of Russia, Russian Academy of Sciences, CMAKS, Levada Center, Center for Macroeconomic Analysis and Short-Term Forecasting, The Moscow Times
