Monthly foreign language issue, 2019 of the analytical review – The Monitoring of Socio-Economic Situation and Perceptions of the Population
Monthly foreign language issue September, 2019 of the analytical review – Monthly Monitoring of Socio-Economic Situation and Perceptions of the Population. Analytical material prepared by a pool of experts of the Institute for Social Analysis and Prediction of the Russian Presidential Academy of National Economy and Public Administration.
Main conclusions of the issue:
- Given that in Q1 2019 GDP increased by 0.5% in comparison with the same period of the last year, in Q2 its increment came to 0.9%. GDP growth rate over 6 months of 2019 constituted 0.7% relative to January-June 2018.
- July 2019 saw acceleration of GDP growth to 1.7% year-on-year. Nevertheless, the Bank of Russia has revised its annual forecast of GDP growth downwards from 1.0-1.5% to 0.8-1.3%. This being said, Russia’s GDP can get additional support: the Bank of Russia key rate was cut to 7.25% in July 2019 and to 7.0% in September 2019.
- In July 2019, inflation demonstrated downward trend to 4.58% in per annum terms (compared to July 2018) against 4.66% posted in June 2019. Seasonally adjusted July prices have moved up by 0.3% compared to June 2019. The effect of postponed from the turn of the year indexation of housing and utility services fueled inflation the most.
- Over 8 months of 2019 RUB in nominal terms appreciated against USD by 2.7% and by 5.2% against Euro, meanwhile in real terms appreciation amounted to 2.7% and 5.7% respectively. In comparison with January-August 2018, the real ruble exchange rate appreciated against euro by 2.0% and depreciated against USD by 4.1%.
- Retail trade turnover in July 2019 amounted to Rb 2,792.2 bn or 101.0% against July 2018. Wholesale trade turnover amounted to RUB 6,897.2 bn (104.4% on July 2018) of which small businesses accounted for 36.9%.
- In Q2 2019, the number of labor force amounted to 74.9 mn persons down by 1.0 mn than in the corresponding quarter of the last year. Contraction of the number of labor force resulted in the reduction of both the number of employed (down 0.8 mn persons compared to Q2 2018) and jobless (down 0.2 mn persons).
- Unemployment (according to the ILO methodology) demonstrates downward trend - during H1 it decreased by 0.2 p.p.
- As of H1-end 2019, only four regions managed to implement formal requirements of “May” decrees in wages and salaries.
- At present, the subject of four-day workweek is being discussed. However, in the context of current economic conditions decrease of working hours without sacrificing wages is impossible. Moreover, the views of high working hours in Russia are rejected by statistics.
- In Q2 2019, the real disposable cash income of the population contracted by 0.2% as to the same period of the past year. Meanwhile the real accrued wages and the real awarded pensions went up by 2.6% and 0.9% respectively.
- In Q2 2019, the level of the subjective poverty of the population increased and the self-rate incomes inequality of the population went up.
- For the first 7 months of 2019, Russia’s natural population decline increased and amounted to 209.6 thousand persons. Over January-July 2019, there were 860.4 thousand births down 7.4% against the same period in 2018. In 2018, the total fertility rate went down to 1.58 per a woman on average. However, the feature of the current situation consists not so much in the overall birth rate decline as in the dynamics of the components of this index regarding the sequence of births. The total index of first births constitute as of 2018-end 0.66 per a woman on average. The reduction is drastic against the backdrop of 2010-2015. Such low index of first births was observed in Russia only once in 1999 at the “bottom” of the birth rate downward trend.
- Sharp increase by 77.7% of the migration growth of Russia’s population seen in H1 2019 was due to the improvement of interdepartmental (Rosstat and Ministry of Internal Affairs (MIA)) cooperation on transfer of migration data. It seems that issue with transfer of information negatively affected registration of only international migration, movements within the country were not affected and affected insignificantly.
- The number of temporary arrivals of foreign citizens by mid-summer 2019 exceeded indicators for the last three years mainly on account of tourists, those arriving for hire, private and tourist purposes. The number of migrant workers went up by nearly 300,000 compared to the previous year. However, the number of effective work permits remained unchanged, in other words, growth of the migrant workers was not followed by an increase in the number of legal migrant workers.
- The results of H1 2019 demonstrate that the most acute issues are household incomes and investments which have been decreasing in more than half of the regions. Housing construction is exiting from the crisis first of all in large agglomerations, however in the Far East the recession is ongoing.
- Budget revenues grow in the vast majority of regions. Social expenditure decreased only in 6-8 regions and one third of them stood on the threshold of gubernatorial elections in September 2019. Spatial polarization has been growing especially regarding wages, investments and budget revenues. Moscow has been breaking away more and more from other regions.
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