Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stability trumps growth for government as Russians prepare to vote -economists

EconomySep 16, 2021 07:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A truck drives past a campaign poster of the United Russia political party ahead of the Russian parliamentary and regional election outside Ulan-Ude, Buryatia republic, Russia September 16, 2021. REUTERS/Maxim Shemetov/File Photo 2/2

By Alexander Marrow

MOSCOW (Reuters) - Low wages and rising prices are crucial issues for Russians at parliamentary elections this week, but maintaining financial stability matters more to the Kremlin than driving growth, economists say, with inflation a lingering concern.

The Sept. 17-19 election, the last major vote before a presidential poll in 2024, comes as Russia is recovering from its worst economic downturn in more than a decade, the result of the COVID-19 pandemic and low prices for oil, its major export.

With vaccinations underway and commodity prices recovering this year, the economy is growing faster than previously expected, expanding 10.3% year-on-year in the second quarter.

Inflation has remained stubbornly high despite five interest rate hikes this year, reaching an annual 6.84% in mid-September.

The central bank's most recent key rate increase, by 25 basis points to 6.75%, was last week.

Higher prices are a major concern for voters: Oxford Economics research based on a recent WCIOM poll showed falling incomes and essential goods becoming unaffordable ranked among the population's main worries.

"That's what the population is very concerned about," said Tatiana Orlova, Oxford Economics' lead emerging markets economist and author of the research note.

"The economy is important in these elections because that is what's on people's minds."

Ahead of this week's elections, President Vladimir Putin ordered one-off social payments and public sector salary increases worth at least 500 billion roubles ($7 billion) - something analysts said may further fuel inflation.

"This might have some pro-inflationary impact going forward," said Dmitry Polevoy, head of investment at Locko-Invest. The central bank has said the fresh social payments - to pensioners and soldiers, among others - will not have an impact on its monetary policy.

Kremlin critics say the measures are designed to boost support for the ruling United Russia party. The Kremlin says the support measures have nothing to do with the election.

With a budget surplus now close to 1 trillion roubles, the government could afford to spend even more, analysts say, but it prefers stable public finances to faster growth and improved living standards.

"On the priority scale, both for the government and the Kremlin, maintaining fiscal and financial stability, having a high level of reserves and low level of debt, is by far a more significant objective than supporting growth and more stable, more speedy increases in real incomes," said independent economist Vladimir Tikhomirov.

Russia does plan to spend 1.6 trillion roubles from its sovereign wealth fund on infrastructure projects between 2021 and 2024, despite central bank warnings of inflationary risks if authorities spend too freely.

The rainy-day fund, built up from oil revenues, stood at $190.5 billion at Sept. 1.

($1 = 72.4500 roubles)

Stability trumps growth for government as Russians prepare to vote -economists
 

Related Articles

Britain to raise minimum wage to 9.50 pounds a hour
Britain to raise minimum wage to 9.50 pounds a hour By Reuters - Oct 25, 2021

LONDON (Reuters) - Britain will announce a rise in its minimum wage for those aged 23 and over to 9.50 pounds ($13.06) per hour from 8.91 pounds in the government's budget...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email