Fragile Near Term Consumer Spending Countered By Dynamic Long-Term View

Although we expect consumer confidence in Russia to remain fundamentally weak over H210 (calendar), with retrenchment continuing to have a large bearing on expenditure, it is coming back more strongly than much of Europe. This has been helped greatly by the fact that going into the downturn Russian households were much less leveraged than many of their European (Western and emerging alike) counterparts. Retail sales (largely on the back of favourable base effects) and real wage growth are moving back up (see chart 1), while the unemployment rate has been falling.

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