Reuters 30 May 2022 - by Jake Cordell
LONDON (Reuters) - For Oleg Kechin, owner of a chain of barbershops, forecasts that Russia will be plunged into its deepest economic crisis in a generation feel overdone.
U.S. President Joe Biden may have promised that Western sanctions would wreak economic havoc in Russia, but Kechin's business is still drawing in customers in the town of Saransk, which lies 510 km (320 miles) southeast of Moscow.
"There's no deep crisis. In general, everything's fine," he said. "Everyone's talking about a decrease in purchasing power, but I haven't noticed it."
Yet, such confidence may not be entirely well placed, if some indicators are to be believed. Trade with the outside world has plunged, consumers are reluctant to spend and rising prices on basic items are starting to squeeze household budgets.
Russian officials insist the economy is holding up. The central bank slashed interest rates by three percentage points to 11% on Thursday and expects to cut its forecast for inflation for this year from the current prediction of 18-23%.
Under capital controls and orders that exporters sell half their hard currency earnings, the rouble has rallied and, at about 66 to the U.S. dollar, is stronger than before Russia sent its armed forces into Ukraine on Feb. 24.
President Vladimir Putin, who has welcomed the departure of foreign firms which have sold up or just dumped Russian assets, said Russia could not be isolated from global trade.
"One thing that bothers me ... is constant price rises for everyday goods and even vegetables. I think that signals the worst is yet to come." he said. "The situation with the labour market in my sphere doesn't make me very optimistic either."
'DEMAND CRISIS'
Some indicators justify his concerns. VAT receipts, which reflect consumer spending, fell 54% in April year on year, the Kommersant daily said, citing preliminary finance ministry data.
Economy Minister Maxim Reshetnikov said on Friday there was a "demand crisis" in business and consumer spending.
(Additional reporting by Marc Jones in London; Editing by Kevin Liffey and Edmund Blair)