Rising middle class ready to shop

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MOSCOW — Fifteen years after the collapse of the Soviet Union, there is growing concern in Western capitals over the state of Russian democracy. But for many in this country’s emerging middle class, the freedom to shop seems more important.

“If democracy means having to live like we did in the ‘90s, people starving in the streets and girls prostituting themselves to feed their families, then no thanks,” said Valeria Batunina, 32, clutching two bags of clothes she had bought at Mega Mall Tyoply Stan, which claims to be Europe’s busiest shopping center.

“Now people can afford to buy a new car, nice clothes, even travel somewhere warm in the winter,” she said.

With the economy booming thanks to high oil and gas prices, incomes have soared and Russians are spending as never before.

On a typical weekend, Moscow’s streets become hopelessly jammed with cars heading to enormous suburban shopping centers such as the 1.7-million-square-foot Mega Mall, where jostling customers stuff their carts with everything from Swedish furniture to Calvin Klein underwear.

The stores — run by companies like IKEA and Benetton — would be familiar to a typical Western shopper, although in Russia, they tend to be twice the size of their counterparts in Europe or North America.

Soaring international energy prices have made life in Russia — the world’s largest exporter of gas and second-largest oil exporter after Saudi Arabia — better than anyone can remember.

After seven years of steady decline through the late 1990s, Russia has recorded eight straight years of economic growth, with expansion for 2006 estimated at 7 percent — more than three times the rate in the European Union.

President Vladimir Putin boasted at a press conference last week that Russia’s gross domestic product topped $1 trillion last year, while adding that his top priority was still to raise living standards.

“Russia has one of the fastest-growing income and consumption rates in the world,” said Mikhail Terentiev, a consumer analyst at Moscow’s Troika Dialog investment bank. “People who could never afford to buy quality goods now can.”

Car sales have risen sixfold since 2001, with Russians spending $32 billion on cars last year. Only 3 million Russians owned mobile phones in 2000, but today, more than 80 million do.

From less than 5 percent in 2001, the number of households owning a personal computer has jumped to about 20 percent. Consumer lending is also booming, and many Russians are getting their first taste of credit cards.

A flat income-tax rate of 13 percent and remnants of the Soviet system, such as subsidized housing and utilities, mean that many Russians have more disposable income than typical Western consumers.

Salaries still lag far behind those in Western countries, with the average income in Moscow only about $800 a month. Millions of Russians, especially pensioners and rural residents, continue to live in abject poverty.

Analysts say there can be no doubt about the emergence of a growing middle class, particularly in Moscow and St. Petersburg.

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