The Russian Economic Miracle of 2017

fullsizeoutput_602
“Pilling from 499 rubles. Ultrasound cleaning from 599 rubles.” Photo by TRR

More Than Five Million Russians Have Trouble Paying Back Loans
Takie Dela
May 30, 2017

Around five and half million Russians have trouble servicing their debts. Their debut burden is more than 60% of their income, reports Gazeta.ru, quoting a statement by Vladimir Shikin, deputy marketing director at the National Credit History Bureau.

According to experts, this figure is regarded as a critical indicator. Among the main reasons for arrears are the unreliability of borrowers and the lack of means to finance current debts.

Residents of the Kemerovo, Tyumen, and Novosibirsk Regions are the most indebted. According to the National Credit History Bureau, three million people cannot make payments on loans, which is 8% of all borrowers. Their current debt load exceeds half of their monthly incomes.

According to Shikin, the share of overdue loans remains at 16%, even as the number of new loans grows. The majority of Russian borrowers have several loans, and the average economically active Russian owes creditors 146,000 rubles [approx. 2,300 euros].

Meanwhile, research done by RANEPA shows that the debt burden of Russians is not critical. As Natalya Orlova, chief economist at Alfa Bank, stressed, the debt of Russians is estimated at 12% of GDP.

“In developed countries, debt is 60% to 80% of GDP, so the market has potential for growth,” emphasized Orlova. However, she argues that Russia issues a relatively small percentage of mortgages, whereas in developed countries, mortgages account for nearly 90% of all loans.

Experts hope that the debt burden of Russians will not rise greatly. After the 2014–2015 crisis, banks were more way about issuing loans, so the debut burden of Russians will fall. In the near future, banks will be even more cautious. In particular, the Central Bank has planned to consolidate the data of major of credit history bureaus in a single data base to combat indebtedness.

Earlier, the United Credit reported that half of Russian borrowers had been applying for new loans to pay off old loans. According to its figures, 45 million Russians with old loans had taken new loans in banks. Over half of them had done this to pay off old loans.

The analysis shows that 53% of borrowers had taken new loans in cash to partially or fully pay off already existing loans. 27% of the borrowers had spent more than half of the new loans on paying debts.

________________________

Almost 60% of Russians Admit They Have No Savings
Takie Dela
May 29, 2017

Around 59% of Russian families have no savings, reports Rambler News Service, citing a report from the polling and market research firm inFOM.

According to a survey commissioned by the Central Bank, the figure has remained stable [sic] the last three months. In December 2016, 64% of those surveyed had no savings.

Yet a quarter of Russians believe that now is a good time to save money, while 44% hold the opposite opinion. According to experts, the tendency to save has grown noticeably since the beginning of the year. In February, fewer than 17% of respondents answered the question positively.

The majority of respondents replied that spare cash should be saved or put away for a rainy day, while a third of Russians would spend the money on expensive, major purchases.

The poll showed that 40% of respondents prefer to keep their savings in a bank account, 26%, in case, and 20%, partly in a bank, and partly in cash.

Two thousand respondents, aged eighteen and older, from fifty-five regions of Russia were involved in the survey.

According to research by RANEPA, the share of Russians who save money dropped by a third in 2016, from 55% to 40%. Moreover, in March, 40% of Russians claimed they had only enough money for food.

________________________

VTsIOM: 67% of Russians Skimped on Groceries during the Past Year 
Takie Dela
May 30, 2017

During the past year, 67% of Russian skimped on groceries in one way or another; 27% of them in a substantial way. Pensioners and residents of big cities had to skimp most of all. These figures were reported by pollsters VTsIOM.

The survey dealt with Russians’ attitudes to government regulation of the food market. 82% of respondents were against the idea of limiting supermarket opening hours on weekdays and weekends. According to 68% of them, if the government decided to do this, it would cause a number of problems. It would be hard to buy groceries in the evenings, and the selection would be reduced. Nearly 40% believed that limiting competition would generate price rises in small shops and produce markets.

Only 15% of Russians favored limiting competition, mostly pensioners aged sixty and older. When replying about what they thought about regulating prices for basic foodstuffs as a way of supporting the poor, Russians were divided in their opinions. Exactly half of them said such restrictions were ineffective, while 32% supported a combination of government and market measures, while 14% believed the government should solve the problem.

The VTsIOM survey showed that Russians were concerned about the government’s restricting prices for basic products. 55% said it would lead to the closure of stores, while 28% said it would lead to shortages, price gouging, and disruption of supplies. However, a quarter of respondents believed that prices would subsequently drop, and life would improve.

Russians see the government’s key role in regulating the produce market in support for domestic producers and developing farming, as well as in quality control. However, according to Yulia Baskakova, head of social modeling and forecasting at VTsIOM, “While worrying with all their heart for domestic producers, supporting improved food quality, and supporting the development of farming, Russians are not willing to sacrifice their comfort and put up with a reduction of the range of goods to which they are accustomed and its becoming less available. The survey showed that 88% of Russians are not willing to put up with a drop in their quality of lives to reduce the price of essential foodstuffs.”

The poll was occasioned by a suggestion, made by Federation Council member Sergei Lisovsky, that regional authorities could decide how large store chains should operate. Lisovky also suggested prohibiting supermarkets from opening at nights and on Sundays, and permitting them to work on Saturdays only until four o’clock in the afternoon. Lisovsky has argued that such measures would support small business and promote small-scale trade.

Translation and photo by the Russian Reader. Faithful readers might wonder why I have cited Russian opinion polls at such length after making a big effort, over the past couple of years to show that this pollocracy, while real enough as a practice, does not tell us much or anything at all about what actual Russians thinking or are planning to do.  I have made an exception in this case, however, because I think the three news items, above, show, between the lines, as it were, what really afflicts the Russian economy, and how the feigned populism of the political/economic elite rears its head, quite often in fact, to suggest impracticable solutions to the knotty problems their own mammoth corruption and instinctive hatred of small business and independent individuals generates the dead end they claim to want to alleviate by, among other thing, commissioning one “public opinion poll” after another while stubbornly failing to notice that their enthusiastic terrorizing of Krasnodar farmers, independent truckers, and Moscow street vendors show they have no interest whatsoever in small business, much less reducing the prices of basic foodstuffs for pensioners. The only thing that interests them is getting richer and making their power untouchable. TRR

Advertisements

Life on the Installment Plan

“Sovcombank. Are you a pensioner? Your loan is approved!”

Half of Russians in Arrears Take Out New Loans to Repay Old Loans
Takie Dela
April 18, 2017

In 2016, according to the statistics of the United Credit Bureau (UCB), 45 million Russians with current loans took new loans from banks. More than half of these people intended to use the money to pay off outstanding loans.

The bureau’s analysis showed that 53% of borrowers took a new cash loan that was used to fully or partly repay existing loans. 27% spent more than half of the new loans to pay their debts.

On average, Russians borrow between 101 and 126 thousand rubles [between 1,650 euros and 2,080 euros, approx.] to repay debts. According to statistics, around half of the borrowers (56%) take the money to repay debts of 50 thousand rubles or less or debts over 500 thousand rubles (47%).

33% of those who take new loans before repaying old loans have a debt of 100 thousand rubles. Nearly a fifth of all borrowers (18%) have three outstanding loans and a total debt of 278 thousand rubles, while every tenth borrower has five or more outstanding loans and a total debt of 575 thousand rubles.

71% of those who have five or more outstanding loans have taken a new loan to repay the interest on the existing debt. 65% of those with four outstanding loans and 60% of those with three outstanding loans have done the same thing. Those who have only one outstanding loan are the least likely (42%) to use a new loan to make interest payments.

“The trend may indicate the growing popularity of loan refinancing programs, which many Russian banks have vigorously brought on line in the past year,” commented UCB’s director general Daniel Zelensky. “Borrowers who took out loans at high interest rates in 2015 naturally have wanted to refinance them on more favorable terms.”

He added that many borrowers have realized that now it is “irrational to service several loans in different banks at the same time.”

In May of last year, the National Credit History Bureau analyzed 3,700,00 Russian creditors and reported that the most indebted Russians were schoolteachers and physicians. Employees of the social sector and education sector spend 33.39% and 33.3%, respectively, of their income paying back loans. The highest ratio of monthly loan payments to income (33.56%) was recorded amongst pharmaceutical and medical workers.

According to UCB’s report, no fewer than 600,000 Russians are currently bankrupt. That is, they owe more than half a million rubles and have not made payments on their debts for three months.

Translation and photograph by the Russian Reader. If you found this article interesting, you might want to read “Kotlas: Russia’s Bankruptcy Capital,” posted here in December 2016.