Russia’s economic recovery is facing COVID-19

By Andrey Ostroukh

MOSCOW (Reuters) – Russia’s economy has been recovering steadily in recent months, benefiting authorities before the election, but there is a huge increase in COVID-19 cases and the need to raise interstellar rates to combat inflation.

After shrinking by 3% in 2020, after the hardest contraction in 11 years, the Russian economy was on its way thanks to the rebound in consumer demand and high oil prices, its key exports, and its renewed economic outlook.

The central bank expects the economy to grow by 3-4% this year, despite rising inflation at its three-year rate hikes. But the expected fourth rate hike, to at least 6% in July, and the chances of getting more expensive loans could have an impact on business activity.

The economy reached pre-pandemic levels this year, when a new flood in Russia in the COVID-19 cases was a huge success as Delta was blamed for a highly infectious new variant.

“There are bases to continue the recovery quarterly, but the recent virus waves and the possibility of further hardening measures are a key threat,” the research firm Capital Economics said in a statement.

After offering a free vaccine in late 2020 and almost returning to life in 2021, with cafes and gyms as usual open and many people working from offices, Moscow recorded a daily 9,120 increase in COVID-19 cases on June 19.

The city of more than 12 million people responded with a compulsory vaccination to a large group of citizens. This model was also adopted by other regions that also imposed wider restrictions, spreading public dissent in the face of the September parliamentary elections.

In the second quarter of 2020, when there were blockades and other reductions in COVID-19, real disposable income in Russia fell by 20 years and the economy fell by 9.6%.

The capital also launched a QR code system: customers in cafes and restaurants must present a QR code showing that they have been vaccinated, have had an infection that indicates immunity, or have recently been negative.

On the day the QR codes were launched, an Italian cafe in central Moscow saw only one customer with a code, while other orders were to be delivered, while revenues fell to about a sixth of previous levels, the cafe director Olga told Reuters.

While queues have increased for vaccine centers across Russia, many people are looking for ways to avoid shooting.

Larisa, 49, who sells shoes at shopping malls in a Moscow suburb, said she is afraid of the vaccine because of kidney problems. Initially, he decided to buy a fake vaccination certificate, but after the authorities threatened to punish him with prison sentences, he decided to quit his job.

“Combined with high inflation, tight money and tight fiscal policies, while the epidemiological situation is deteriorating, high geopolitical risks and threats to increase risk could drown the economic recovery in 2H21, especially in the consumer segment,” the BCS agency said.