Macro Analysis /
Russia

Opinion Page - Leverage in 1Q19 – growing risks for lower income groups

    Natalia Orlova
    Natalia Orlova

    Chief Economist

    Alfa
    15 August 2019
    Published by
    In our previous publication about the middle class in Russia (Russian middle class: Drifting towards state sector, more risk averse, published on 24 June, 2019), we discovered that the middle class population did not actively participate in the recent lending boom, while the lower income group (the 5th income decile group) had expanded its exposure to financial leverage. The recently published Rosstat figures imply that in 1Q19 the financial leverage of the 5th decile group has started to decline, while the 4th income decile group has taken the lead in building financial risk – its financial leverage has grown 70% in nominal terms over the last 12 months. The shift in financial leverage dynamics to group’s with lower income levels is a negative sign, however at the moment the expectation of faster budget spending, including salary increases in the defense segment announced for September-October 2019, may help the population to deleverage going forward.