OREANDA-NEWS. August 11, 2010. Russians have spent more money abroad in 2010 compared to 2009 when the amount for transactions abroad plunged due to general spending cuts. These conclusions were made by the Russians’ Spend Abroad annual study published by ZAO Citibank. The share of international transactions will grow to 18.8% of total credit card spend in 2010, while in 2009 it was at 17.0% (down from 19.4% in 2008), reported the press-centre of Citi.

Traditionally, the spending volume goes up during the January holidays and summer vacation time. For instance, the expenditures of Russians abroad during 2010 New Year holidays have increased from 19.3% (in 2009) to 25.1%, thus approaching the pre-crisis results of 2007 (25.3%).

Elina Ribakova, Citi Chief Economist for Russia and CIS: "Credit cards expenditures are one of the most accurate and objective sources of statistical information on real expenditures of the Russian middle class while abroad. What differentiates this study from sociological surveys is its much larger sample (hundreds of thousands of respondents), as well as the use of actual data instead of estimates. Such statistics are often used around the world when calculating the index of consumer confidence."

Michael Berner, Consumer Lending Head at ZAO Citibank, commented on the key findings of the study: "We observe a higher purchasing power of Russians abroad in 2010 as compared to 2009: Russians save less when travelling and the structure of expenditures tracks the pre-crisis numbers in 2008."

Most Popular Purchases
The average transaction amount stood at USD165 in 2010, down 6.25% from the average amount in 2009. The drop is attributed to the fact that more cardholders were travelling abroad and the volume of smaller purchases such as groceries, as well as expenditures at cafes and restaurants has increased. Yet, this fact is regarded as a positive one, since the number of people making purchases while abroad has been up this year, driven by the increased number of travelers with lower incomes as compared to the past years, thus indicating their increased confidence this year.

Despite the fact that average transaction amount has declined, the structure of Russians’ spending by categories gradually approximates the pre-crisis one. In 2010, there has been recorded growth in such categories as jewelry, car rentals, and medical services. Compared to the crisis year of 2009, shopping fans have increased spending on clothes and shoes from 13.7% to 16.9%. Expenditures on hotels (20.4%) and air flights (9.7%) have remained at the same level as in 2009.

Most Popular Countries
The leaders among the countries have remained unchanged in 2010: they are USA, UK, France, and Italy. USA (14.9%) traditionally dominates, being the most expensive country for travelers, especially in the transportation expenditures category. Moreover, bank cards are the most popular payment method in the USA due to extensive coverage of merchant acquiring by banks. UK (12.3%), France (9.3%), and Italy (8.4%) are most favoured countries for shopping for Russians.

New to Top-10 are the following countries: Thailand that is becoming increasingly popular as an exotic and relatively inexpensive resort, as well as Cyprus and Luxemburg. The latter two states are the tax havens that climbed up the rankings due to technical reasons – the increased volume of transactions over the internet. For instance, some of the internet shops enjoying highest popularity among Russians are registered in Luxemburg, while Cyprus is the legal registration jurisdiction for many companies that provide Russian individual investors with access to the financial markets, such as Forex.

Across the countries where Russians spend the most, specific trends in purchases of certain goods may be tracked. For instance, expenditures on air flights (15%) traditionally score the highest in the USA. At the same time, unlike in many other countries, expenditures in the US are distributed a lot more evenly across various categories of goods and services. The main expense line for Russians in France and the UK is hotels (20% of total spending in the UK, and 22% in France), as well as clothes and shoes (14% in the UK, and 18% in France). At the same time, at least 33% of expenditures in France are shopping-related, and over 7% are spent at the famous French restaurants. (Expenditures at restaurants in France are the highest in Top-10 of the most popular countries.) In Italy, clothes and shoes (42%) remain the most popular category of expenditures, while over 50% of total Russians’ expenditures in Italy are related to shopping.

In Spain, Turkey, Thailand, and Finland that are highly popular among the Russian tourists, hotels also account for a large share of the total expenses (18%, 22%, 32%, and 24%, respectively). Hotel expenses account for almost one-third (32%) of all expenses in Thailand. Finland, for instance, ranks the highest among the leading countries by spending on groceries (11%) due to their superb quality, relatively low prices, and, of course, proximity to Russia. The structure of expenditures in Turkey and Spain differentiate only in that Russians substitute expenditures at the Spanish department stores with jewelry stores in Turkey, and instead of renting cars in Spain, they make purchases, mainly alcohol, at Turkish Duty Free shops.

Methodology
The study uses statistical data on purchases made by Citibank’s clients with credit cards abroad. The study analyzed the monthly data for the period between January 2007 and June 2010. The randomly selected sampling of at least 50,000 respondents included Citibank’s clients over 22 years old that reside in Moscow, Saint Petersburg, Samara, Nizhniy Novgorod, Yekaterinburg and other cities with population of over 1,000,000 residents. Data for the first six months of 2010 and the statistical trends for the past four years have been used to build a forecast until the end of 2010.

The study did not analyze data on expenditures made by individual credit cardholders, and instead used generalized statistical data.

* Forecast