Russia Prepares For GDP Surge As Consumers Scramble To Spend Their Plunging Rubles

Tyler Durden's picture

In the most ironic twist of all amid the "currency crisis" enveloping Russia, we suspect the world's central bankers will be looking on jealously as The CBR manages to achieve precisely what The BoJ and The Fed are desperate to achieve. In raising inflation expectations, The FT reports, Russians are hurriedly turning their depreciating Rubles into jewelry, furniture, cars, and apartments as the currency's collapse prompts a shopping spree that will likely lead to a surge in GDP. As one anxious shopper noted, "none of us know what’s happening. We’re all worried that the currency will keep falling," and so "it’s time to buy furniture!" And sure enough, shopping centers are currently experiencing a spectacular rush.

 

As The FT reports,

Russians hurried to change their savings and pensions into dollars and euros while also stocking up on furniture and jewellery as the rouble’s collapse accelerated.

 

Their mounting concern was reflected on Tuesday morning in the red lights of the currency exchange booths that dot the city, which were ticking over to show ever weaker rouble rates.

 

...

 

“I took out some of my pension and I want to change it into dollars,” said Galina, a retiree, who declined to give her surname. “None of us know what’s happening. We’re all worried that the currency will keep falling.”

 

The dramatic collapse in the rouble in recent days has not triggered outright panic, but it has prompted a rush to change currency and to stock up on durable goods such as furniture, cars and jewellery before they become even more expensive.

 

...

 

"I think the rouble will carry on falling until the end of the year,” she said. “It’s time to buy furniture!”

 

Indeed, shoppers reported enormous queues even at 2am in Ikea on Monday night as people rushed to stock up before the rouble plunge triggered price rises. The Swedish furniture company had said it would be raising prices from Thursday.

 

...

 

"People who didn’t manage to exchange their money at 35 roubles or 40 roubles to the dollar have been buying up high-end goods, cars and apartments because a massive repricing hasn’t happened yet,” said Vyacheslav Trapeznikov, acting director of the Urals Builders’ Guild, in Yekaterinburg.

 

Car sales in Russia rose in November from the previous month — in spite of a slowing economy — and December is “rather promising”, according to the Association of European Businesses in Russia trade group. “Retail demand has been extraordinary in recent weeks,” said Joerg Schreiber of the AEB.

 

...

 

“People are trying to spend their last roubles and buy up things that haven’t been priced, but this trend has an expiration date,” Mr Trapeznikov said.

Russians are lining up at currency exchange centers to swap their increasingly worthless Rubles for Dollars...

 

And as Germany's N-TV also notes, they are spending that money...

Shopping centers are currently experiencing a spectacular rush. The most recent example is the Swedish furniture chain Ikea, prior to their department stores in the past few days with long queues. Several hours had to wait for the customers before they could enter.

 

The reason is that Ikea had announced in early December to try to raise prices in the near future because of the decline of the ruble. While Ikea calmed after its customers that prices would continue to meet the published list prices in the summer. At the same time, the Group achieves in Russia each year well over a billion euros in sales, that its operations were dependent on external factors explained.

 

...

 

"At this point, Russia differs from industrialized countries to save where people start when a crisis begins," says the economist Igor Nikolayev. "For us, this is accompanied by a strong degradation of money and the people spend more, which relaxes the situation for some time," adds the analyst of consulting company FBK.

 

...

 

"People have rushed to buy expensive goods such as televisions, computers, laptops, to save their rubles, which lose value dramatically," says Maria Wakatowa of the consulting firm Watcom, the observed trade.

*  *  *

Simply put - it's all about inflation expectations. And unlike The Fed or The BoJ, who keep trying to jawbone higher expectations into their citizens' minds, the CBR has achieved it and with it - a spending spree before things get more expensive and implicitly a surge in GDP. Ofcourse, however, the spending surge can only be short-term and will stop as soon as there are no more Rubles to spend.

*  *  *

Finally - this seemed to sum it all up nicely...

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Ghordius's picture

too fast, imho. FX markets inbetween, and a few things more. but I'm sure some would like to see this meme propagating, it would make sanctions more fierce looking

rejected's picture

Reading Russian news sites it appears they still don't consider the oil and ruble crash an attack, or at least aren't letting on. They seem to see it as an internal problem from printing too much Ruble these last years.

Kind of interesting.

Winston of Oceania's picture

The shelves will not be restocked so you have that to look forward to...

PSST, buy lots of toilet paper, just ask the Venezuelans. Oh wait you have rubles to wipe with!

youngman's picture

They cant buy a McDonalds Hamburger..they shut those down last year...too bad....they are going to need some food in the future....I heard Apple shut down online orders from Russia....that will piss them off if they cant get their Iphone...well its back to lines for bread in Russia..pass the bottle Vlad...its cold

BeerMe's picture

If you can't see the signs you are in trouble.  Oil down, Russia down (although this may be great for Russia in the long term; especially if they ditch central banking with a ruble backed by gold). 

Eventually blowback that hits everyone across the face will come to the U.S.  In my mind it has already started with shale oil becoming a losing venture.  If you haven't already started be aware and prepared.  Feeling like 2007/2008.

Winston of Oceania's picture

(although this may be great for Russia in the long term; especially if they ditch central banking with a ruble backed by gold). 

Never in a million years, just because you hate America doesn't make Putin anything more than he really is. fucking mind of a child...

sainchaw's picture

not sure what will depreciate faster: the ruble or Ikea furniture. 

Manipuflation's picture

True story.  There really are getting to be some issues.  What a beating.  Everyone makes fun of me for wanting an old grain truck but check this one out.  Tell me how you will stop this truck. 

tarabel's picture

 

 

Don't have to stop it. It will drop dead on its own. According to my diesel-repairing neighbors, the Detroit Diesel 2-stroke was a serious lemon. Grain truck, sure. But find one with something else under the hood or you will be sooooooorrrrrrie.

Nice Ordnance Wheel.

Manipuflation's picture

You might be right but that looks like a lot steel moving at a high rate of speed.  Not only that it is pretty obvious that someone put headers on a deisel engine.  Look at the exhaust stack because is sure as hell is not stock.  You have to give credit where it is due and that is one badass grain hauler.  I would not build one exactly that way but I do give credit because it close to what I would do.  One thing is for sure, you are not going stop it with your stupid cop car. 

pitz's picture

The Central Bank caused the mess by raising interest rates. 

AdvancingTime's picture

I expect the dollar to become stronger against other currencies until the end when it to will fall. When the dollar dies expect to see people jump into line to dump them as fast as they can.

I contend the primary reason that inflation has not raised its ugly head to become a major economic issue is because we as  a society are pouring such a large  percentage of our wealth into intangible products or goods. This includes currencies. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply.

The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas.

 It is important to remember that debts can go unpaid and promises be left unfilled. If this happens where does it  leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years.  More in the article below.

http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....

honestann's picture

The overt and over-the-top manipulation of the western financial and "government" predators-that-be may push Russia to "do what is right".  Which is what?

For Russia to switch to physical gold as their official currency.

Want to buy oil or gas from Russia?  You pay in physical gold.  Want to buy anything else from Russia?  You pay in physical gold.  You want to sell something to Russia?  You can choose, physical gold or rubles.  Let's just say that you're a lot more likely to have a customer (and a better price) if you accept rubles.  But get rid of them quick, because they may not exist much longer once the world gets used to honest trade again (physical goods (gold) for physical goods (oil, gas, etc)).

Putin.  Want a solution to the abuse being heaped upon you?  Simple.

Sell ALL your paper assets (bonds from other countries), immediately convert all that cash into physical gold, then totally switch to physical gold as a currency.

You will find that others are no longer able to dick you around financially.