The increase in VAT will not affect the demand for consumer loans among Russians. Since January 1, 2019 the VAT rate increased from 18% to 20% in Russia. At the end of November, the head of the Central Bank of the Russian Federation, Elvira Nabiullina, said that the increase in VAT is a factor in the short-term impact on inflation, but it can have lasting effects.
“Of course, before the increase in VAT, people probably bought more goods at the end of last year, at least we saw it in the mortgage market, and we saw it in the car loan market – there was high demand. Probably at the beginning of the year, accordingly, the demand will be somewhat lower”, answered Zadornov to the question of how the increase in VAT will affect consumer lending.
“But what is important, there was no real income growth last year. It’s not there, in fact, for the last four years. And we see that the population is just replacing these drop-down incomes with a bank loan, that is, people maintain their standard of living with loans. Therefore, the increase in VAT, I think, will not affect lending. On the contrary, there may be the same demand for consumer loans, auto loans, because people just want to maintain their standard of living, update some things, go on vacation due to loans”, he said.
By the end of 2018, the Bank of Russia expects growth in lending to the population in the range of 21-24%, and in 2019 – at the level of 12-17%. In November, banks, according to the Central Bank, increased lending to the population by 2.3%, the retail portfolio of the banking sector as of December 1, 2018 reached 14.7 trillion rubles.