Alfa Bank Analysts Say Russia’s Middle Class Shrinking as Real Incomes Fall

Moscow-based Alfa Bank says in a new analysis that Russia’s middle class has shrunk by nearly 20% since the start of the country’s economic crisis in 2014, The Bell reports.

Around a third of Russia’s population is currently middle class, down from 37 percent in 2014, according to the study. The report defines members of the middle class as having monthly earnings from 39,000 to 99,000 rubles ($620 to $1,600).

Low oil prices and Western sanctions have taken a toll on Russians’ real incomes, a figure which has been falling five years in a row. Economists speaking to RBC last month predicted that the population’s purchasing power will keep falling in 2019 despite the government’s projection for modest growth.

“It is precisely the middle class that has become the biggest victim of the slowing economy — its incomes have stagnated over the past 10 years,” The Bell writes.

Moreover, representatives of the middle class have grown more risk averse in the years since the 2008 financial crisis, according to the bank’s analysis — they take out fewer loans or credit cards and opt for stable employment instead of opening a business.

The stagnating wages of Russia’s middle class in 2008-2018, coupled with the growing wages of the upper and lower classes, reflects a global trend, the report says.

Russia’s biggest lender Sberbank recently estimated that the share of those who consider themselves middle class has shrunk from 60 percent to 47 percent in the five years since 2014.