TREND VISION 2020 How To Make The Future Manageable Trend Vision 2020 Russia A CRISIS LIKE NO OTHER, The world is trying to understand the impact caused by the global COVID-19 pandemic. Uncertainty remains. We do not yet know if there will be a second wave or further AN UNCERTAIN consequences, and what our "new reality" will ultimately be. RECOVERY In this issue of the annual Trend Vision report we talk about trends, signals of change and how to analyze them, in order to make the future, in which this crisis is not the last one, to be not a frightening «black box», but a platform for exciting experiments for successful brands and companies focused on long-term sustainability. International Monetary Fund. th 2 ‒ © Ipsos | Trend Vision 2020. Russia World Economic Outlook. June 24 2020 CONTENTS 1. ECONOMIC OUTLOOK 2. LIFE STAGE. Perception of the crisis depending on the stage of life 3. THE CREATIVE ROLE OF CRISES 4. LOOKING FOR BALANCE • Physical security – Digital security • Technology – Humanity • Online – Offline • Accelerate – Slow down • Ecology – Economy 5. MONITORING OF CHANGES 6. GUIDELINES FOR THE FUTURE 3 ‒ © Ipsos | Trend Vision 2020. Russia ECONOMIC OUTLOOK 4 ‒ © Ipsos | Trend Vision 2020. Russia COVID-19 AND ITS CONSEQUENCES Effect of COVID-19 on Period of Drop in industrial family financial status production non-working days Got worse significantly 24 The dynamics of the decline in industrial Got a little worse To prevent the spread of 40 production in Russia in June on an Not changed 31 coronavirus pandemic in annualized basis remained negative and Improved Russia, non-working days were almost unchanged compared to May 2020.* 4 announced from March 30 to The largest decline is in the commodity Q: How has COVID-19 / coronavirus affected your family's April 5, 2020. financial situation (including all cash receipts - salary, sector. pensions, benefits, etc.) over the past 7 days? The period of non-working days, Due to COVID-19 your salary… were workers didn’t work, but Dynamics of industrial production in Russia, % kept their salary, was extended remained unchanged 23 3,3 1,1 3 twice before ending on 11 May. 0,3 decreased, but the amount of work has remained the same 27 Jan'20 Feb'20 Mar20 Apr'20 May'20 Jun'20 decreased in proportion to the decrease in the volume of work increased 47 -6,6 -9,4 Source: Ipsos Adapt! June 2020 Source: Federal Sate Statistics Service, Russia-9,6 Base: 18-65 y.o., cities 1 mln+, N=3000 5 ‒ © Ipsos | Trend Vision 2020. Russia *Source: Interfax IA based Federal Sate Statistics Service Data THE RECOVERY OF THE RUSSIAN ECONOMY IS PLANNED IN THREE STAGES The Russian government's economic recovery plan is designed in Ready to return to “previous life” after Russia is in top of countries three stages. It contains 500 new measures with a budget of ALL restrictions will be removed, % ready to re-engage approximately RUB 5 trillion over two years. Comfort with Re-engage & Mitigate Comfort Re-engage only First step I will not return to most Comfort Mitigate only previous habits 9 Until the end of Q3/2020. Stabilize the situation, prevent a further Comfort neither Re-engage nor Mitigate drop in household income Only when the vaccine appears 9 Russia 51% 26% 11%12% Second phase Immediately upon lifting 44 restrictions Up to Q2/2021. Complete the economic recovery process, reduce Japan 53% 7% 30% 10% the unemployment rate, ensure the growth of citizens' incomes to Within one month 15 33% a level comparable to 2019. Italy 44% 10% 13% Within 1-3 months 11 Stage three Until Q3-Q4/2021. Reaching sustainable economic growth Within 3-6 months 7 France 44% 9% 38% 9% In July 2020, from the decree on the national development goals of Within 6-12 months 4 USA 41% 11% 42% 7% Russia until 2030, the goal for Russia to enter the five largest economies in the world disappeared, which was formulated in the Source: Ipsos Global Advisor. Resumption vs Protection Source: Ipsos Adapt! June 2020 Base: 16-74 y.o. Apr 24 - May 8, 2020. N=19 000 decree of 2018. The reason is the unfavorable market conditions. Base: 18-65 y.o., cities 1 mln+, N=3000 6 ‒ © Ipsos | Trend Vision 2020. Russia RETURN TO GDP GROWTH EXPECTED IN 2021 The fall in GDP in 2020 is greater than in 2014, but less than 2009 At the end of June, the IMF worsened its forecast for Russia, GDP Change. Projections for 2020-2021yy announcing a fall in GDP in 2020 by 6.6% (in April, the forecast Yearly percent change was for a fall of 5.5%). In contrast, the forecast for 2021 was 8,5 World raised to 4.1% from 3.5% in April 2020. 8,2 6,4 Russia 5,2 The main reason for the decline is crucial 5,4 5,1 5,4 drop in oil prices 3,5 3,5 3,6 3,4 3,4 3,8 3,6 The reason for the projected sharp decline in Russia in 2020 is 5,5 5,6 2,9 4,9 the significant decline in disposable income due to the rapid 4,5 4,3 3,7 4,1 3 0,7 0,3 decline in oil prices. -0,1 2,3 1,6 1,8 1,3 IMF predicts gradual recovery 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 The COVID-19 pandemic had a more negative impact on -2,5 -4,9 economic activity in the first half of 2020 than expected, according to the World Economic Outlook Update. The recovery is forecasted to be more gradual than previously -6,6 predicted. -7,8 Source: International Monetary Fund. World Economic Outlook Update, June 2020 7 ‒ © Ipsos | Trend Vision 2020. Russia CONSUMERS ALSO EXPECT SITUATION TO BE BETTER IN A YEAR In May 2020, the negative perception of the current situation in Russia, People see the situation around the COVID-19 pandemic as less which has been growing at an increased rate since the beginning of 2020, negative than after the VAT increase and the announcement of the turned out to be higher than the crisis peak in 2014. Even having pension reform in 2018, but more negative than the crisis in 2014. decreased by 3ppt in June 2020, the value of the negative perception of However, in June 2020 there were signs of optimism. the current situation is still higher than the peak in 2014. PERCEPTION OF CURRENT ECONOMIC SITUATION EXPECTATION As compared to a year ago, % changes in one year, % 100 100 85 90 81 82 82 90 Worse 80 80 69 68 68 70 64 62 70 58 60 52 51 53 52 60 Will be 48 48 46 47 46 44 45 50 43 42 42 42 50 41 42 43 42 42 41 41 worse 36 35 36 35 35 33 33 40 32 33 30 40 31 32 30 29 29 28 29 29 28 27 30 19 19 20 19 30 15 27 13 14 29 29 29 14 Will be 20 11 10 9 11 12 20 29 23 27 29 27 27 12 26 25 6 6 8 6 8 8 7 8 25 24 23 26 22 3 5 5 17 16 22 better 10 2 1 2 Better 10 15 13 14 13 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 03 04 05 06 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 03 04 05 06 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 Q: How the economic situation in Russia has been changed since last year / will be changed in one year? Source: Ipsos. The “New Reality” Monitoring 8 ‒ © Ipsos | Новая реальность, 06'20 Base: 18-65 y.o., Russian cities 100 mln+, N=1000 LIFE STAGE PERCEPTION OF THE CRISIS DEPENDING ON THE STAGE OF LIFE 9 ‒ © Ipsos | Trend Vision 2020. Russia LIFE STAGE SEGMENTATION Years of experience in conducting sociological and segmentation studies have shown that the most important differentiating characteristics are age, marital status, the presence of children and the composition of those living together in a household. The Life Stage segmentation is based on these characteristics. It describes all stages of a person's life path and can most clearly reflect the reaction of people to changes in external environment, including crises. A total of 11 consumer segments have been identified. For ease of perception, in this review, we have combined segments similar in type of behavior into five enlarged groups that have the most striking differences. Descriptions are on the next slide. 10 ‒ © Ipsos | Trend Vision 2020. Russia LIFE STAGE SEGMENT PROFILES AND AGGREGATED GROUPS Life Stage Empty Single Young without children Middle age Parents segmentation nests pensioners characterizes a Parents of Parents of Middle-aged Parents of Parents of adult Middle-aged preschool younger Single person's needs Fledglings Left the nest Nest Builders couples without teenagers children Empty Nests singles children children Pensioners children (12-18 y.o.) (19+ y.o.) at different (0-5 y.o.) (6-11 y.o.) stages of life 7%* 3% 8% 2% 2% 15% 8% 8% 14% 16% 6% Age 16-39 16-39 16-39 40-54 40-54 18-54 23-59 28-65 35+ 45+ 55+ Not married / Not married / Married / Married / Not married / Not married / Family status Any Any Any Any Any Divorced Divorced Living together Living together / Widow(er)) / Widow(er) Children No No No No Yes / No Yes Yes Yes Yes Yes Yes / No Who lives Spouses / Spouses / Spouses / Spouses / Spouses / Spouses / Spouses / together in the Parents - - Parents / Parents / Parents / Parents / - Parents Parents Parents household Children Children Children Children 11 ‒ © Ipsos | Trend Vision 2020.