Russian Poverty Rising at Fastest Rate in Nearly 20 Years
- New Europe Investor
- July 20, 2015
The Moscow Times reports that Russian poverty is rising at levels not seen since the 1990s.
Liliya Ovcharova, who is the head of Income and Living Standards Analysis at Moscow’s Higher School of Economics said in an interview with a Russian newspaper, that the government is doing little to stem the problem.
Real income is Russia has fallen 14% in the past year thanks to high levels of inflation peaking at nearly 17% this year, mixed with contractions in GDP that could be as high as 5% in 2015.
Western sanctions imposed on Russia following the annexation of Crimea have hit the economy hard. Spiralling inflation levels were then compounded with Russian counter sanctions on European agricultural products last year, making food prices soar. Inevitably this has hit the poor hardest.
According to the government statistics service, the number of people below the poverty line in the first quarter of the year was 22.9 million, compared to 19.8 million in the same period in 2014.
Ovcharova said that increases in Russia poverty levels such as this have not been seen since 1998. She said real wages have fallen for seven straight months with government action to stem the decline far from adequate.
Whilst pensions and other social benefits have been raised in Russia, they have been far below the rate of inflation.
The halving in the global price of oil, which is one of Russia’s major exports has hit government revenues, meaning social measures to help poverty levels are difficult to execute. Russia has been tapping heavily into foreign currency reserves in an attempt to make up the shortfall.
Ovcharova added that the low unemployment rate of 5.6% in Russia masks the rapidly increasing levels of partial employment.