25.04.09

Russians are gradually losing confidence in the future - they are ready to stop buying cars and going on vacations, to reduce aid to relatives, and to start saving money for medical treatment rather than luxuries.

And yet, the Russians are going through this crisis with more stamina than people in Western countries - hardships are no novelty to them.

On the face of it, many representatives of the officialdom continue oozing optimism, even though their forecasts regarding the crisis contradict one another glaringly.

It is common knowledge that people's moods influence the real economy in no smaller a measures than actions of the government and the Central Bank or the situation on the financial markets, the Kommersant daily writes. The more enthusiastic this mood is, the faster the economy recovers.

That is why Russia's Federal Service for Statistics /Rosstat/ polls the Russians about changes in their material well-being, their perception of economic developments in the country and feelings about what the future has in store for us.

Findings obtained through these polls lay the basis for the consumer confidence index that varies from -100% to +100%. In the third quarter of 2008, this index rose slightly above zero, for the first time in Russia's newest history, thus showing that roughly equal numbers of Russians expected improvements and deteriorations.

However, the indicator started falling again later, as the consumers' economic expectations in the first quarter of this year proved to be the worst ones over a period of ten years.

The national economy received the lowest possible assessment, Vedomosti daily writes. The index of expectations fell 35 points to -27%, as 48% respondents said they felt pessimistic and only 14% expressed optimism.

A total of 42% Russians said they expected a worsening of their material status and 38% said their status would not change much over a year.

The respondents generally thought it was not the right time for making big purchases or saving money, and so the appropriate indices went down 33 points to -45% and 20 points to -61% respectively.

Along with people's consumer moods, the crisis also seems to have changed their consumer conduct. Previously, those who saved money would say they were doing so to improve their housing, to buy a car, to go on vacations, to celebrate an important event /39.5%/, to feel secure in old age and 'in a rainy day' /15.9%/, to buy real estate /15.7%/, to get medical treatment, to pay for one's own or for children's education, and to give assistance to family members or friends /7.5%/.

The picture has changed dramatically today. Medical treatment occupies position at the top /29.2%/ and housing, which you cannot buy on credit anymore, takes the second place /24.4%/. About the same percentage of Russians as before is saving for a rainy day, but projections for a redecoration of housing, buying a new car, and celebrating jubilees has reduced by almost a factor of two.

As for assistance to relatives and friends, it has almost reduced to naught /1.8%/.

Compared with the first quarter of 2008, the percentage of people who forecast a worsening of their material status has grown to 42% from 13%. On the face of it, only 7% of the people polled said they expected an improvement of their well-being in the next twelve months.

Still, the Russians look much more optimistic compared with citizens of other countries. Novye Izvestia daily cites an opinion poll taken by the international company Ciao Surveys/Greenfield Online. It showed that 31% Russians think the crisis will not last long and the situation will stabilize soon enough.

Poles are the only nation that views the future from a more optimistic angle than the Russians /41%/. As for the British, Germans and Americans /the company took the poll in five countries/, only 13% to 16% of them expect an early enough ending of the crisis.

"The Poles and the Russians lived through an economic shock fairly recently, in the 1990's, while the West saw a comparable economic decline in the 1980's and many people there have simply forgotten that even major crises can be overcome," the newspaper quotes Olga Kuzmina, a member of the board of experts at the All-Russia Public Opinion Research Center /VCIOM/.

In the meantime, members of the Russian government have completely lost track of their own forecasts for the future of this crisis.

Representatives of the powers that be gathered for a conference at the Supreme School of Economics Monday to discuss the problems inherent in the crisis, and their opinions demonstrated a vast difference.

Some speakers predicted that Russia is heading for another three or four critical years, a new blow to the banking system, and a perishing of inefficient industries.

In contrast to this, other officials claimed Russia has passed the worst moment of the crisis and it will re-emerge from the critical situation earlier than other countries can do it.

This prompted analysts to start asking questions on whether or not the government knows at all how to overpower this crisis.

For instance, First Deputy Prime Minister Igor Shuvalov told the businessmen the times of trial are going to continue for the global economy for another several years.

"We're considering a term of about three years," he said adding that Russia is in a more favorable position all the same.

"Our situation is more conducive to structural reforms than the situation in the U.S. and Europe," Shuvalov said. "We've survived a big shock, yet were are more flexible and we can offer better reactions."

Industry and Trade Minister Viktor Khristenko voiced an opinion much along the same lines - he claimed that Russia will get out of the crisis much sooner than other countries.

"The Russian economy feels far more heavier aftermaths of the crisis today and, in a certain way, this is the consequence of the young age of our economy, when illnesses are sensed much more vividly," Khristenko said. "But immunity is worked out in young age, too. I think our revival and economic rise will be really fast."

President Dmitry Medvedev's senior economic advisor, Arkady Dvorkovich, aired a radically different assessment.

"The greater part of the Russian economy is so inefficient that it doesn't have any chances of survival in the coming decade," Dvorkovich said. He stressed the essentiality of ridding the economic system of burdensome inefficient elements.

"We must set up new efficient industries and technologies and mustn't issue loans to the old inefficient ones," he claimed. "Monies should be issued exclusively for creating new efficacious niches in the economy."

All these opinions are too extreme, says Dr Ruslan Grinberg, the director of the Institute of Economics of the Russian Academy of Sciences.

"A rapid withdrawal from the crisis looks too nice to be true," Novye Izvestia quoted him as saying. "Western countries must recover first and this /their recovery/ will restore demand for our fuels and mineral resources."

Agvan Mikaelyan, the director general of the Finekspertiza consulting group shares the opinion of government optimists, says Nezavissimaya Gazeta.

"Why on Earth should everything be bad here?" he said. "I don't see any grounds for pessimism because there aren't any."

Mikaelian did not deny the existence of certain bad tendencies. "What's really bad is that everything's monopolized here and there's no competition."

Yet this country's huge resources lay grounds for hope, he believes.

"Russia can just do nothing at all for a whole year and live quietly enough all the same," Mikaelian said. "Please point you finger at any other country that can afford doing this. No one else can."

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Source: Itar-Tass