Moscow Money
Rich Russians are spending as if there's no tomorrow--which many say there won't be
Mercury has plans to build another, similar mall in a prestigious suburb. The demand is there: According to Pogromov, new collections from Chanel, Dolce & Gabbana, Patek Philippe, and Rolex are regularly bought up before the items arrive in Moscow. The company's warehouses virtually never see returns.
So who buys all this stuff? Pogromov says you don't have to be super-rich to live the life of a luxury consumer. "We have customers who make $2,000 to $3,000 a month," he says. "They start with inexpensive items--a piece of jewelry for $1,500, a watch for $2,000, but then they come back in a year or two to buy something for five, six, or 10 thousand."
This does not seem to be wishful marketing: All indications are that Russians indeed spend more than they can afford. For instance, Maxim Bunin, a 31-year-old tech administrator, takes home a bit over $1,400 a month, which works out to $350 for each member of his family; his wife has no income. Statistically, his family is at the lower edge of what Russian economists consider to be the middle class, but Bunin's lifestyle tells a different story. He takes a taxi to and from work every day, spending $5 each way, and goes out to a meal, he says, "whenever I walk past an eatery and happen to be hungry." That occurs about once a week and costs him from $10 to $17.
In other words, Bunin spends more than a quarter of his take-home pay on restaurants and taxis. The reason, in his case, is not an excess of money but a lack of faith. "I do not consider myself to be well off," says Bunin. "I do not own an apartment, and I see no chance ever of buying one: We will never be able to save enough for a down payment. Plus, I never feel sure that I will still have a job tomorrow, so I can't imagine taking out a mortgage or any sort of loan. There is no point in saving up for the big things, which means we don't have to scrimp on the little things, like taxis."
Profits of doom. Economists cite two major reasons for Russia's apparent consumer boom. The catch-up theory holds that after about three post-crash years of uncertainty, when people tried to save, they are making all the purchases they put off. The excess-cash theory holds that people essentially have nowhere else to put the money coming into the country through the sale of oil and other exports. But another reason for Russia's buying spree may just be that lack of faith and expectation of disaster voiced by Lavrov and Bunin.
Despite the vast difference in their incomes, Bunin and Lavrov manage their money in essentially similar ways. "I do not invest, though I realize that it's stupid because I'm losing money," says Lavrov. "All investment opportunities in this country seem suspect to me. I don't think anything good will ever happen here. The entire economy is based on pumping the land dry of its natural resources. Outside of Moscow, the entire country is as poor as central Africa."
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