Russia faces a dual challenge: Drought-stricken harvests and booming consumer spending
Russian Agriculture Minister Oksana Lut has urged citizens to visit churches and light candles for the prophet Elijah, who is considered the patron of rain and harvests due to the devastating drought, the Moscow Times reported on Tuesday.
The portal conveyed that as a result of the drought, the pace of winter cereal sowing has dropped to its lowest level in 11 years. In the European part of Russia, rainfall over the last 30 days has reached only 20 percent of the average. This issue may prove particularly severe in areas where the growing season ends early and the first frosts begin to appear.
The minister acknowledged in an interview with the Interfax agency that Russia has been affected by all possible natural phenomena this year. "First, we had recurring frosts, then in April, the drought began. Siberia is flooded. Locusts have also appeared, and recently, dust storms occurred in the south," she listed.
According to estimates by the Russian Grain Union, farmers will harvest 120-125 million tonnes of grain this year instead of the expected 145 million.
How the war affects Russia's economy
As reported by "Financial Times," contrary to expectations, the Russian economy is experiencing growth in consumption and real wages. Russians have more money and are eager to spend it, driving a consumption boom. This phenomenon results from increased government spending and labour market shortages.
According to data from the Russian statistical office Rosstat, real wages in Russia have increased by nearly 14 percent, and the consumption of goods and services by about 25 percent. This marks a significant change compared to the beginning of the invasion of Ukraine in 2022 when many entrepreneurs feared an economic collapse.
Rising wages translate into increased consumer spending. Russians are eager to spend money on domestic tourism, restaurants, and durable goods.
The boom is also visible in the real estate sector. Sergei Skatov, an expert on the Russian real estate market, notes that developers can sell nothing throughout the year and still be profitable. They have already sold everything they can build in the next three years.
