‘Savings? Are you kidding?’ Months after Moscow invaded Ukraine, Russians’ money problems are growing

“In June they laid off about 70% of my store,” said Sergei, a furniture maker in the Siberian city of Tomsk. The company had been suffering since March, after its main customer, the Swiss retail giant IKEA, withdrew from Russia following Moscow’s unprovoked invasion of Ukraine on February 24.

“To be honest, I haven’t looked for another job for a month,” Sergei said. “I was shocked. I was already depressed by everything that was going on, and on top of that, I was fired.

During this time, Sergei’s family worked with their small savings. He earned money by accepting car rides before finding a job as a caretaker in a supermarket.

Like many people RFE/RL spoke to for this report, Sergei asked that his surname be withheld for fear of repercussions for speaking out amid a growing crackdown on dissent by President Vladimir Putin’s government. But stories like hers are easy to come by as more and more ordinary people have seen their lives turned upside down by Moscow’s war on Ukraine and the unprecedented Western sanctions it imposed on the country.

According to a study last month by state-funded polling firm VTsIOM, 21% of respondents said their savings had shrunk since the February invasion. Additionally, 34% said they had no savings even before the invasion and the changes it brought about in Russia.

Some 39% said their savings had not been affected, while 5% said they had managed to increase their reserves.

It is difficult to verify such figures in Russia, where polls and sociological studies are under constraints. A online survey by Raiffeissenbank in early February revealed that 70% of respondents said they had no savings at all.

“We do not save anything”

In August, the Russian government predicted an economic contraction of 4.2% for 2022, and Economy Minister Maksim Reshetnikov said on September 6 that figure could be 2.9%. Independent economist Vladislav Inozemtsev wrote, however, that partly because of the disruption caused by Putin’s mobilization order, the contraction by the end of the year will be at least 10 percent.

According to economist Michael Alexeev, of Indiana University in the United States, the true extent of the contraction for average Russians is likely masked to some extent by increased spending on arms and other equipment needed to wage war in Ukraine.

“This means that even less production is dedicated to the needs of ordinary consumers,” he said. “If you keep that in mind, the situation appears even more painful.”

Asked about the VTsIOM’s findings on savings, Alexeev said the most alarming finding was the lack of savings reported by 44% of respondents over the age of 60.

“Given the low pensions in Russia, this is even more alarming than the general decline in savings,” he said.

Irina is a nurse in a clinic in the settlement of Chemal, in the Altai Republic, in southern Siberia, with a monthly salary of 25,000 rubles ($400). The rugged and breathtaking mountainous region is one of the poorest in the country.

“Savings? Are you kidding? I can’t even remember the last time I heard that word,” Irina said. “We don’t save anything. On the contrary, we borrow money and live in debt. I owe about 9,000 rubles ($150) now.

She sees only two ways to improve her lot: “Either work in a COVID hospital or work in Ukraine.

“But I have two children and a father to take care of,” she said. “I hope things don’t get worse.”

Originally from the city of Irkutsk in eastern Siberia, Dmitry, a web designer, moved to Moscow several years ago. At the end of May, he was fired in a group chat message with other colleagues. Its boss said the firm’s foreign clients had pulled out of all their projects, saying business in Russia had become “toxic”.

“I found out later that he stopped developing all Russian-language projects and worked entirely on Western markets,” Dmitry told RFE/RL’s Siberia.Realities. “He had already left Russia by then.”

For more than three months, Dmitry lived on the 200,000 rubles ($3,300) he had in his account.

“Now I work for a state agency,” he said. “On a three-month project. But what happens next? Will there be work after November? — I do not know.”

Dmitry said he is currently more concerned about Russia’s military mobilization.

“They catch people in hostels and on the subway,” he said. “I no longer use transport and I order my groceries delivered.”

A man checks job listings at a Russian job center in Omsk. (file photo)

Before Putin announced military mobilization in September, Aleksandr, 27, worked at a chemical plant in the city of Achinsk, Krasnoyarsk region. In order to avoid being called, he quit his job and moved to the region’s eponymous capital, where he now earns his living as a driver.

“I don’t want to go to war,” he said. “I have nothing to do there. That’s why I currently live in a big city.

He says he used most of his savings to pay off his mortgage in Achinsk before leaving. He took around 150,000 rubles ($2,500) with him.

“Nothing Good on the Horizon”

Consumer price inflation has been a problem in Russia since the February invasion, said economist Maxim Ananyev, a researcher at the Melbourne Institute of Applied Economic and Social Research in Australia.

“According [government statistics agency] Rosstat, since January the price of sugar has increased by 30%, margarine by 42% and beef by 15%,” he said. “These are not luxuries. These are things that people buy more or less every day. Also in March we saw a consumer panic in which people rushed to buy canned goods etc. People then used their savings and were unable to replenish them.

Since the VTsIOM survey was conducted, Ananyev said, three important developments have occurred, the impact of which has yet to be seen: the mobilization, the explosions that disabled the Nord Stream gas pipelines to Europe and the adoption by the European Union of a new package of sanctions aimed at capping the prices of Russian oil and gas.

He said it’s hard to predict the impact of such unprecedented developments, but it seems safe to say “there will be less money”.

“Economists like Sergei Guriyev and Oleg Itskhoki say that every new dollar will now go to financing the war,” Ananyev said. “I agree with them, but even if the government tries to spend a portion of every incoming dollar to support the economy, there will always be significantly less money.”

“It is very difficult to predict what will happen in the future, but overall we can say that there is nothing good on the horizon,” he concluded.

Robert Coalson, editor of RFE/RL, contributed to this report.