As companies pull out and sanctions grip the economy, young Russians face a dramatic change in living standards.
A daily medium cup of coffee in Moscow has turned into an unrealistic luxury for Katya*, costing “as much as a whole meal in a mid-range cafe”.
When the Russian capital’s shopping centres were filled with Western brands, “I regularly bought Nespresso coffee, and Ikea products”, says the 21-year-old.
Just one month into Putin’s war with Ukraine, however, the shop spaces are “half-empty”, Katya says. “Chocolate and Coca-Cola are still currently on sale, but soon they may not be either.”
“Uniqlo, H&M, Zara, Pull&Bear, Sephora, Jo Malone, Starbucks, Mcdonalds, Nespresso, Ikea are closed, as are many brands like Dolce & Gabanna and Gucci.”
As foreign companies pull out of Russia, a new iron curtain is rising between Moscow and the West. Many young Russians are mourning the loss of a lifestyle they have grown up accustomed to.
Russian households face a dramatic slump in living standards, amid a two-year recession and high inflation fuelled by the rouble’s collapse.
Economists from the Centre for Economics and Business Research (CEBR) warn the combination of sanctions, higher import costs, and soaring commodity and food prices mean Putin’s war will deal a “severe” blow to living standards that will be “hard to offset” for the Kremlin.
Wages, meanwhile, are expected to plunge by a quarter in real terms over the next two years.
While some can no longer afford Western tech brands, others worry whether affordability or access to their medical supplies will become limited.
Russia’s technology industry relies heavily on Western goods, such as Apple, which have stopped trading – raising the price of remaining goods. “Whatever is left in the warehouses costs twice as much, I cannot buy it,” says Katya. “If my phone breaks I do not know what I’ll do – in Russia there are no companies which make tech.”
Meanwhile Anastasia*, a translator in her mid-twenties, has been warned by her doctor that her mental health medication may soon be unavailable, as it is produced overseas.
“My doctor told me to buy two packets of pills instead of one because we don’t know if we will be able to buy [them].”
While many major pharmaceutical companies, such as Pfizer-BioNTech and GlaxoSmithKline, continue to ship essential products to Russia, citizens are panic-buying in fear of a complete cut off. GSK has suggested it could stop supplying non-essential medicines such as HIV drugs, while others have temporarily suspended sending in aesthetic products.
“A lot of people are saying you can’t buy tampons. People just went crazy and bought all the tampons they could get,” says Anastasia. “There were long, long queues in the pharmacy.”
It is also incredibly difficult to get hold of cotton buds and toilet paper, she says, with limits of five packets per person in Moscow stores.
A statement last week by the Russian Council of Shopping Centres said it had reached out to counterparts in India, Turkey, Iran and China with “a list of foreign companies” that had stopped trading in the country “in order to find suitable equivalents”.
The move highlights how some sectors are now hoping to rely on businesses from “friendly” nations. Chinese smartphone makers Huawei and Xiaomi, for instance, could continue to operate in the Russian technology market as Western counterparts make their exit.
But the impact extends to more than youngsters being unable to afford goods. Forecasters predict hundreds of thousands of jobs will be lost amid the mass exodus of Western companies.
According to the latest figures from Yale University, 500 companies have now withdrawn from Russia. City economists polled by Bloomberg fear the unemployment rate will pick up from just above 4pc at the end of 2021, to more than 7pc in 2023.
The result is a deep recession in Russia with GDP slumping almost 10pc in 2022 and a further 1.5pc next year. It would mark the biggest economic contraction since the aftermath of the Soviet Union’s collapse three decades ago.
As sanctions take hold, Anastasia is concerned a lack of flights to the West will impact her career plans. She says she always dreamed of teaching Russian in Europe or Britain, but now doubts this will be possible in the near future.
Earlier this month Russian flag carrier Aeroflot stopped all international flights, except to Belarus, while many foreign carriers from the US, EU and UK have also ceased operations.
“I want to go [abroad] of my own volition, I don’t want to run away from Russia and I don’t want to look like a Russian refugee,” Anastasia says. “You won’t be able to travel and people in Europe and Americans and other countries just hate us because we are Russians, it’s really scary.”
Some routes do remain intact. Tim Clark, president of Emirates, one of the few airlines to maintain its services, said earlier this week that Russians had “every right” to continue travel abroad despite the conflict in Ukraine. Emirates’ fares have, however, gone up in price amid surging fuel costs.
The Kremlin has tried to placate fears, maintaining sanctions are just as harmful for the West as they are for Russia – implying future economic prospects may not be so dire.
“A few weeks after the introduction of ‘hellish’ sanctions against Russia it has turned out, as expected, that they return to the West like a boomerang,” former president Dmitry Medvedev said on his official Telegram channel on Wednesday.
“It is also obvious that the sanctions themselves are not yet achieving the results that Western politicians managed to shout about with their voices weakening from the strain.”
Anastasia is confident the current crisis will be only temporary: “I’ve been told that we are going to be fine and the European people will suffer too because of these sanctions and because of gas.
“We don’t have fancy stuff anymore, we can’t go to H&M and buy their clothes, but I’m going to be fine with that. It’s not going to be forever. I think people will find a way somehow or sanctions will be cancelled.”
But others are not convinced. “I think this is all just terrible. I can’t believe this is all happening. It’s totally surreal,” says Katya of Russia’s battered economy.
“Society is restless, we are always worrying, constant psychological pressure and uncertainty about the future frightens us.”
*Names have been changed to protect their identity.