MOSCOW – Russians are backing Vladimir V. Putin as he confronts the United States and Europe over Ukraine, even if their wallets tell a different story.
Putin’s popularity is soaring, along with consumer confidence and a gauge for “social comfort.” Another set of data reveals an abrupt change in a country that reveled in consumerism after the collapse of communism. Car sales are plunging, tour operators are going bankrupt, and disposable incomes are stalling.
A new generation of Russians who have grown up since the fall of communism is finding patriotic pride in making do with less. While Putin’s ratings are still on the rise, analysts and researchers in Moscow say the deteriorating economic data highlights the risk of letting politics trump prosperity.
“Pride and patriotism have awakened in Russians, as was the case in the U.S.S.R., and that’s why they are willing to sacrifice some part of their well-being,” said Dilyara Ibragimova, a lecturer on economic sociology at the Higher School of Economics in Moscow. “I think that’s temporary, because the continued growth of prices will hit their pocketbooks and affect their attitude.”
Car sales, which grew by monthly leaps of as much as 88 percent in 2007, plunged by an average of 20 percent in June and July. At least five tour operators have gone bankrupt as people cut back on travel. Domestic demand is seizing up even as a Russian consumer-confidence index had its biggest jump in more than four years last quarter and a gauge of “social comfort” has been at a record high since June.
That marks an about-face for Russia, where consumer spending accounts for half of the $2 trillion economy. Against the backdrop of the economic collapse in the 1990s, Putin has made Russia’s rising prosperity and stable public finances the cornerstone of his appeal.
Helped by the rising price of oil, the country’s biggest foreign-revenue earner, Putin presided over budget surpluses during his first two terms in the Kremlin between 2000 and 2008. Growth averaged about 7 percent a year during the period, and real wages increased an average of 15 percent annually, according to data compiled by Bloomberg. Including declines for much of 2009, wage growth has averaged 3.9 percent since.
As growth engines sputtered with the financial crisis shaking the global economy and capping fuel prices, consumers stepped in. Their spending propelled growth in 2010-13 as investment wobbled and industrial output slowed. Until this year.
In March, when Russia annexed Crimea from Ukraine, disposable incomes had their biggest drop since 2009. The government estimates gross domestic product will grow 0.5 percent this year, the slowest since a 2009 contraction.
But that hasn’t made a dent in Putin’s public standing.
“The politics seems to be more important now than economics, which is taking a second seat at the moment,” said Ivan Tchakarov, the chief economist at Citigroup Inc. in Moscow. “The majority of Russians appear to be ready to sacrifice their economic welfare if it serves a bigger goal, which is now to show that Russia is again acquiring the trappings of a big power.”
Putin’s approval ratings took off on the back of his actions in Ukraine, first by bailing out then-President Viktor Yanukovych in December and then seizing Crimea after months of deadly protests that toppled the regime in Kiev.
Stuck with 61 percent backing in November, the lowest since June 2000, support for Putin increased to 87 percent by early this month, 1 percentage point short of a record reached in September 2008 after a war with Georgia, according to polling company Levada Center.
Putin would win an election by 64 percentage points if elections were held the following Sunday, according to a survey by the Moscow-based Public Opinion Foundation.
The patriotic bubble deflating may be a risk for Putin, according to Alexei Levinson, head of the social and cultural studies department at the Levada Center in Moscow.
Even so, the country has a long road to travel before distrust of the government replaces love of country and deprivation leads to upheaval, as happened between World War I and the Russian Revolution, he said.