Models of Russian Economic Growth: Personal Consumption Trends

Abstract

One of the most significant factors of the newest Russian economy crisis, which escalated in 2015–2016, was the decrease of real income and the following reduction of consumer demand of households. The situation on the consumers’ market started to change in 2017 despite the stagnation and the continuing decrease of population income. This paper shows that during 2018 the trends of increase in consumer demand, showing up as part of positive dynamics in retail, have consolidated both in terms of growth rate and in their role in restoration of retail and consumer demand structures. This is proven by progressive increase of the non-food goods share in total retail turnover. It is also shown that the trend of restoration of consumer demand and retail turnover up until now has been unstable and influenced by macroeconomic and institutional shocks. This is confirmed by the negative reaction from the consumer demand on pessimistic prospects of further decrease of real income as a result of pension and tax reforms of mid-2018. The data on changing situation in consumer demand in the second half of 2018 shows no fundamental reasons, which could have guaranteed the irreversibility of changes of consumer model of household behavior and as such the restoration of economic growth model based on generation of internal consumer demand. The stagnation of real population income remains the main issue

Keywords

• personal consumption
• households
• real income
• retail turnover
• durable goods
• food
• goods groups
• growth rates