Russian economy during COVID-19 pandemic: an ordinary citizen’s point of view

Elias Kallio,
B.Sc. (Economics and Business Administration), Research Assistant,
Pan-European Institute, University of Turku,

COVID-19 pandemic has treated Russia very harshly. The official case count over the course of the pandemic is over seven million and the official death toll is close to 200 thousand people. There have also been several accusations of inaccuracy of the statistics based on the excess mortality during the pandemic. For instance, the mortality was 18% higher in 2020 than in 2019 totaling 323.8 thousand excess deaths. For average Russian citizen life in one the leading (by case count) countries has meant lockdowns, hospitals filled with COVID-19 patients and other restrictions. All of these have had a significant effect on Russian economy and the life of an average citizen.

The COVID-19 pandemic has affected the salary development in almost every industry. Real incomes have decreased during the pandemic; however, this development did not start during the pandemic as such. The tendency started already in 2014 and only the level of the decrease has changed during the pandemic. What is more substantial is the fact that in many instances also the level of nominal incomes have decreased. In addition, many small-business owners have taken substantial financial hits during the pandemic, for instance because of the “non-working weeks” (employers were obligated to pay the full salary to their employees regardless) declared by the government.

Development of employment and unemployment has been relatively similar to other countries and the unemployment level has increased substantially. At its peak, the unemployment growth totaled almost 40% (compared to 2019) according to the Federal State Statistics Service. However, unofficial estimates and empirical evidence are even worse. The people working in the service industry have taken the largest hit, but also many other industries have suffered severely.

As mentioned before, the real incomes have decreased during the pandemic. According to the Federal State Statistics Service in July 2021, the inflation in Russia was 6.5% compared to the previous year. However, the empirical evidence in this instance as well suggests even higher inflation (in some product categories up to 25%). In addition, since the beginning of the pandemic the Euro-Ruble exchange rate has changed from about 70 to over 90 at its worst and now being around 85. This has significantly affected the prices of any imported goods, which are in a relatively significant role in an everyday life of an average Russian citizen, taking into account the structure of the Russian economy. In addition, many forecasts predict that this development will continue in the foreseeable future.

In conclusion, it can be stated that COVID-19 pandemic has been very hard on average citizen in Russia. According to John Hopkins University data over 5% of the population have had the coronavirus disease and 200 000 people have paid the ultimate price for the pandemic. However, empirical and other evidence suggest that both of these figures are substantially higher (e.g. excess deaths). A large number of people have also suffered from the restrictions in other ways. Incomes of the general population have also taken a hit (excluding some industries, e.g. IT) in terms of real incomes and nominal incomes. The largest impact has been on service industry workers and small business owners. Unemployment has also increased, which has affected the average income of the population. With these decreased incomes the population of Russia has been forced to deal with increasing prices with little or non-existent government support. However, the worst period in economic terms of the pandemic seems to be over and business is slowly getting back to the “new normal”.

Disclaimer: the views presented in the article are authors own and do not represent the official standpoint of any affiliated organization. Empirical evidence is being used as a concept in order to better demonstrate the point of view of average citizens.

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