Economic sanctions add to growing poverty
Three million more Russians have slipped below the poverty line this year as a deepening economic crisis exacerbated by Western sanctions takes a toll on living standards.
Trade restrictions imposed over the Kremlin’s actions in Ukraine and Moscow’s own countermeasures have accentuated the severe blow done to the Russian economy by the fall in global oil prices, lifting inflation and plunging the country into recession.
Rosstat, the state statistics agency, said yesterday that the number of poor had risen by 15.9 per cent, or 3.1 million in the first quarter compared with the same period in 2014, meaning that 22.9 million Russians – almost one in six – were living below the poverty line.
The increase stems in part from the regular quarterly decision, taken last week, to adjust the poverty line. Responding to inflation, it was raised to an income of 9662 roubles (NZ$252) a month, up 25 per cent in a year. There has been no corresponding increase in wages.
Russian poverty is heavily seasonal and, if 2015 follows previous years, the average number of poor will now fall during the rest of the year but the warning signs are there for the Kremlin. President Putin and his officials have attempted to shrug off the scale of Russia’s first recession in six years, buoyed by the strong rebound of the rouble in the first five months of the year and predicting a swift turnaround.
However, Alexei Kudrin, a former finance minister, confidant of Putin and a respected authority on Russian economic policy said this month that this was misleading.
‘‘We are now in a fully fledged crisis,’’ he said, citing steep falls in consumer demand, investment and industrial production this year. He predicted a 4 per cent contraction of GDP this year followed by zero growth in 2016. The slump is eating away at one
Putin’s most vaunted
of achievements: raising living standards and lifting tens of millions out of poverty on the back of an oil boom earlier in his 15-year rule.
When Putin first became president in 2000, 42.3 million Russians, or 29 per cent of the population, were poor. By 2012 that had fallen to 15.4 million. Last year the figure grew to 16.1 million and early government projections for 2015 suggest that the average for the year will be more than 17.8 million.
The World Bank said in an April report that it expected 14.2 per cent of Russians, or around 20 million people, to be in poverty by the end of the year.
The Times