The volume of paid services in Russia remains low

11 june 2019

The volume of paid services provided to the public went up by 1.2% during the period January to April 2019 compared to the same quarter of the last year, Analytical Center experts reported in their May bulletin on the current trends in the Russian economy.

They noted that the retail sales of goods in the same period increased by 1.7% on an annualized basis (at a comparable rate of inflation). Meanwhile, the disposable household income continued to shrink. In Q1, 2019 it fell by 2.3%.

According to the bulletin, the consumer spendings structure on the paid services is largely unchanged since 2010. The key types of paid services are: housing utilities, transportation and communications.

For the majority of categories of services and for the sector as a whole 2018 saw slow growth and the end of stagnation, the experts wrote. Hotels and other accommodation services were growing at the fastest pace in 2013-2018, the increase amounted to almost 50% evidencing the growth of domestic tourism. The growth was partially due to the popular Crimean resorts becoming part of Russia as well as the construction of infrastructure for the 2014 Winter Olympics in Sochi and the 2018 FIFA World Cup in a number of cities across Russia.

The bulletin noted that the largest share of spendings on total services for poorest households is the housing utilities, communications and education, for the middle class households it is the transport, education and healthcare while the wealthy households spend primarily on entertainment and healthcare. Some types of services may represent the biggest share in spendings for several social groups. For example, both the poorest households and the middle class ones spend the biggest share of their income on education services. Meanwhile, medical services make up a considerable share of spendings on services for both the middle class and the richest households.

However, the total share of paid services in total consumer spendings in Russia remains low compared to both developed economies and a number of developing countries.

For more see the bulletin Market of Paid Services in Russia.

For other bulletins on the current trends in the Russian economy, see Publications.