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As a major oil producer, Russia has long drawn professional expat workers from around the world. Unlike oil producers in the Middle East, however, Russia has arguably not diversified its industry quite so significantly, and as a result the recent fall in oil prices is playing havoc with the Russian economy.
This drop in the price of oil has had a significant “knock on” effect in Russia, as this money has failed to trickle down through the economy. This means that it’s not just senior workers who are being affected by the slow-down, but also those lower down the rankings. Indeed, every level of worker is being affected at present in Russia.
Another side issue being caused by Russia’s over-reliance on oil to prop up the economy is the fall of the ruble. The Russian currency has lost roughly 30% of its value in comparison to the US dollar. This means that many foreign countries – who earn their money in rubles, but pay their expat workers in dollars – are finding it increasingly difficult to stay afloat. As a result, many are laying off expat workers or relocating them to other countries.
Last of all let’s not forget the sanctions placed by the US and her allies in response to Russia’s actions against Ukraine last year.
All of these factors have sadly combined now to create ever decreasing circles in the economy. Less business, lower wages and a weaker economy are all having a notable effect on Russia as a whole – and more specifically on the expats living there.
According to expats, Russia is experiencing something of an expat exodus, as numerous former workers are fleeing the economy, either voluntarily or simply because they are unable to stay afloat financially here.
Accordingly, swathes of property now sits vacant, as their former tenants or owners have fled to better conditions. This can only have a further negative effects on the economy.
The future doesn’t look bright for expats who are committed to Russia long term. Many complain of falling income and are struggling to make ends meet. If, and when, the oil market rebounds, it will likely take a long time for the Russian economy to return to its former glory. Sadly, it seems, there are no short-term fixes for the problem.
On the flipside, for anyone who has been wanting to tour Russia and see the sights, now is the time to go. Thanks to the rules of supply and demand, both flights and hotel rooms are generally cheaper than they have been for years.
In the past, visiting Russia as a tourist has been an expensive, once-in-a-lifetime opportunity. Now, the wonders of St Petersburg, Moscow and other top Russian sites are looking for more affordable and achievable than ever before.
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Expatriate Group & Expatriate Healthcare are trading styles of Strategic Insurance Services Limited who is authorised and regulated by the Financial Conduct Authority (FCA). FCA Firm reference Number is 307133. Strategic Insurance Services Limited is authorised to carry on Regulated Activities in accordance with the permissions granted by the FCA under PART IV of the Financial Services and Markets ACT 2000.