Kremlin tries to emphasise economic war benefits before Putin's election

Viktoria Lytovchenko

Source: Bloomberg

The poverty rate in Russia for 2023 fell below 10%, crossing a historic low for the first time in more than 12 years.

What is known about the state of poverty in Russia

The publication writes that Russia is approaching the presidential elections in "good" shape. Now, the Kremlin spends a lot of money on social support for families, increasing pensions, mortgage subsidies and compensation for relatives of military personnel.

It is said that "public dissatisfaction with the economy is hardly felt." On the other hand, the Kremlin's constant source of economic concern remains the rapid rise in prices, which eats away at Russians' incomes.

In contrast, wage growth exceeds the rate of inflation. For example, the average monthly salary in 2023 reached more than 74 thousand rubles ($814). This is about 30% higher than two years ago. Moreover, by 2023, Russia had not seen real disposable income growth of more than 5% for a long time.

What experts say about the economy in Russia

Russian economist Alex Isakov told Bloomberg that Russia had accumulated military spending long before full-scale aggression. However, the government may choose between spending cuts and raising taxes. After all, on the one hand, high military and social benefits may continue to stimulate price growth.

Isakov added that over time, high prices and demand will exceed the indicators of "infusion" of money into specific areas, i.e. supply.

For example, annual price growth in Feb. 2024 accelerated in Feb. to 7.7% from 7.4%.

In addition, this year's federal budget deficit, at the end of February, already amounts to 1.5 trillion rubles, while the Russian Ministry of Finance planned a deficit of 1.6 trillion rubles for the whole of 2024. At the same time, cash reserves have already halved.