Russian economists predict poverty: Even lifting of sanctions will not help Russia

In the coming years, social inequality will increase significantly in Russia. The middle class will shrink, and the number of poor people will increase rapidly.

Reuters writes about this. The study, conducted in 2022 by Russian experts from economic institutions, business and community organisations, says that only a combination of global economic growth and the easing of sanctions against Russia can improve real incomes and reduce poverty.

The middle class will suffer in any case, even if the sanctions pressure is reduced, the study says. Russia's economy proved unexpectedly resilient in the face of harsh Western sanctions last year, but a return to pre-war levels of prosperity may be far off as more government spending is directed to the armed forces.

The study's most optimistic scenario assumes that real incomes will exceed 2021 levels by about 2% in 2030, and poverty will fall below 10% from 11.8% in 2022. In this scenario, the size of the middle class would still decline to 14-31% by 2030 from current estimates of 20-50%.

The worsening scenarios ultimately lead to lower real incomes by 2030, with poverty approaching 20%. "On the one hand, there will be an increase in the concentration of wealth and a further gap at the top, and on the other hand, a reduction in inequality at the bottom due to the convergence of the middle (or formerly middle) strata with the poor," the authors say.

As OBOZREVATEL previously reported, Russia's Welfare Fund may run out of money this summer due to a high deficit. Opportunities to cover the budget gap are shrinking.

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