Oil Prices, International Sanctions Hit Russian Consumers

HELSINKI – BUSINESS – Fallout from what increasingly appears to be an economic recession in Russia is spilling over into Finland. The Russian economic woes are hitting consumers shopping, or rather not shopping for post holiday bargains.

Nestled in south east Finland, this town was the first stop in Europe for many Russian shoppers. For the past two decades Lappeenranta, just 30 kilometres from the Russian border, has been booming with tourists from the east. But now it’s struggling.

Signs advertise the latest sales but few shoppers roam the aisles.

Heikki Jarvenpaa, the Chairman of the Lappeenranta City Council states, “We have calculated that Russian tourists have created about 2,600 working places in Lappeenranta, I mean in normal times. But today the situation is different, and I guess that we should decrease by about thousand, one thousand working places.”

Russia’s weaker rouble and a sanctions dispute between the European Union and Moscow have taken a big bite out of the local economy.

Out of two million foreign tourists visiting Lappeenranta a year, 1.5 million were Russian. But over the past three months that number has decreased by about 40 percent.

The Russian economy is struggling. A combination of lower oil prices, along with international sanctions against Russia are having an apparent trickle-down economic impact on residents.

The falling price of a barrel of oil is costing the Russian economy an estimated $20 million for each drop of $1 in the price of a barrel of oil.

Russian President Vladimir Putin has cancelled holidays for top officials in his cabinet so they can focus on the growing economic woes that the country is facing.