Jan 5, 2022
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Worse than 1998: Russians lost their New Year’s hopes

Worse than 1998: Russians lost their New Year's hopes

Photo: Sergey Fadeichev / TASS

In 2021, the index of economic hope of Russians approached the absolute anti-record for a 25-year history of observations. According to a study by Gallup International, it was minus 42 percentage points. The Russians were in a worse mood only in 2013, when the index was minus 43 percentage points. Even in 1998, when Russia declared a default, citizens believed a little more in a bright economic future (-41%).

The Economic Hope Index is calculated as the difference between prosperity and hardship in the coming year, measured in percentage points. According to the Gallup study, only 11% of Russian respondents expect economic prosperity in 2022, and 53% expect economic difficulties. 24% believe that the situation will not change, and another 12% found it difficult to answer. It is interesting that last year there were a large number of those who expected no change – 40%.

In addition, it turned out that Russians are more pessimistic about the economic prospects than the inhabitants of the planet as a whole. Although on a par with the Europeans, among whom there were also 53% of the pessimists. Globally, the share of those expecting economic prosperity in 2022 was 26%, and those who are preparing for problems – 41%, respectively, the global index of economic hope turned out to be at minus 26 p.p.

However, this tendency is typical for our country. According to analysts, only six times in 25 years the index had a positive value in Russia – in 2003, 2004, 2006, 2007, 2009, 2010 and 2015. It reached its maximum value in 2006 (+ 9%).

Other polls also show a not very optimistic attitude among Russians. For example, the Public Opinion Foundation published data on the expectations of Russians from 2022. In general, they are more positive than the Gallup results, but they also indicate a fall. To the question: “What do you think, next year, in 2022, the economic situation in our country will improve, worsen, or practically will not change?” only 21% answered positively. 22% believed that the situation would worsen, and 43% answered that nothing would change much (the rest were at a loss to answer). Even last year 28% believed in the best.

According to Nikita Maslennikov, Head of Finance and Economics, Institute of Contemporary Development, the pessimism of Russians is easy to explain and to a large extent justified. People are worried about the coronavirus, slowing economic growth and higher prices.

The situation with the omicron strain remains uncertain. On the one hand, doctors say that it seems to be less lethal than the “delta”. On the other hand, because of the omicron, the incidence rate in Europe and a number of other countries began to grow again, on December 29, because of it, the already begun Youth Ice Hockey World Championship was canceled.

According to the latest data, annual inflation has come close to 8.4% and it is hard to believe that in the next year it will be possible to reduce it by about 4%, as the financial authorities promise. Finally, the rate of economic growth, even according to the positive estimates of the Ministry of Economic Development and Trade, in 2022 is unlikely to exceed 3%. So there are not so many reasons for optimism among Russians, it remains to hope for the earliest possible achievement of collective immunity.

– The results of the Gallup study are not some kind of revelation, says Nikita Maslennikov. – We recently conducted polls of the Public Opinion Fund, and Rosstat published an index of consumer confidence. Everywhere indicators are going down and anxiety about the next year is not decreasing. There are significantly fewer optimists than people with a negative attitude.

It is not even interesting that, but the fact that in our polls from 40 to 50 percent of respondents do not believe in any changes – neither for the worse nor for the better. Such a large proportion of people who are not sure of anything, or who think that the current status quo will remain, is a new situation for us. Previously, more Russians still believed in change.

“SP”: – Is this pessimism and uncertainty justified?

“People’s alertness is easy to understand. First, there remains a serious and worrying uncertainty with the coronavirus. We are just beginning to draw the first conclusions about what the omicron strain will lead to. This is combined with two years of pandemic fatigue. Of course, all this is reflected in the assessments of the economy as a whole.

Second, inflation has become a serious problem. Under these conditions, people do not even really believe in the promised indexation of wages, because they understand that a classical spiral of price increases may occur, and it is not known what all this will lead to. One can, of course, take on faith the forecasts of the financial authorities that inflation will be brought under control next year. And they can really do it. But vigilance remains, and this is natural.

And, of course, the third worrying point is the rate of economic growth. They will clearly be half as much as this year. This also leaves its mark on people’s expectations.

Considering the combination of these factors, I am not at all surprised by the pessimism of Russians. There is a lot of uncertainty, and compared to past years, it has grown noticeably, if only because of the situation with the pandemic. This needs to be corrected, because the feeling of imbalance affects people.

Hopefully, as soon as we finally get that 80% herd immunity, and the nasal vaccine appears in pharmacies, we will begin to feel more confident. But when this will happen is an open question.

“SP”: – Do these negative sentiments affect the economy as a whole? For example, may Russians spend less because of fear of the future?

– In any case, the peak of consumption has already passed. People either turn on economy mode or switch to financial assets. They consume less than a year ago. It is difficult to say whether this is due to psychological matters or is it just a reaction to the situation with the wallet and attempts to maintain one’s financial well-being for a longer period.

This can be seen even in the expenses for the New Year holidays. Although nominally they have grown, they have not changed significantly in their structure. The fall in consumer demand, which has passed its peak, of course, has a negative impact on the economy.

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