International sanctions against Russia are particularly felt in the country. The indebtedness of Russian households reached an all-time high in the first quarter of this year, Russia’s Central Bank said in a report on Tuesday.
“Just before the crisis began (linked to sanctions due to the Russian offensive in Ukraine), the retail lending market has reached the highest level of macro-household debt since the beginning of the same period in 2021, according to this report. The Central Bank notes that in the context of the deteriorating economic situation and a rise in the cost of credit last March, when it had sharply increased its key rate, however, the issuance of new consumer credit has declined.
A leading rate of 11%
In March-April, the issuance of new credits consumption fell by 3.4%. However, the Bank does not notice any significant deterioration in the quality of credit to individuals. “However, in March-April, there was a significant increase in the share of consumer loans for which the next default was missed, from 5.3 to 7.5%,” indicating a potential increase in consumer loans. non-performing loans in the future, ”notes the Bank.
In the wake of the first sanctions following the entry of Russian troops into Ukraine on February 24, the Central Bank had drastically increased its key rate from 10% to 20%, before beginning a gradual decline. It is currently at 11%. Russia’s population is likely to suffer severely from sanctions: inflation at 17.8% a year in April combined with declining incomes due to incoming layoffs and increased recourse to partial unemployment by factories lacking foreign parts , will significantly reduce the purchasing power of the Russians, especially since they have little savings.