Source: Authors’ calculations based on quarterly HBS.

The recovery in 2017 had a different dynamic: incomes of the lower‐income groups were recovering faster. There is a negative relationship between real income growth rates in 2017 and real income level in 2016 (Figure 9). The higher‐income groups like those with high education levels or residents of Minsk continued to experience income declines in 2017. The lower‐income groups, like households with 2 children, single‐ adult households with children, or residents of rural areas and small cities enjoyed recovering incomes in 2017. The only exception here is households with three and more children that continued to experience income declines even in 2017.

_Figure 9: Real income change during recovery in 2017 for major socio‐economic groups negatively depends on initial level of income_ <!-- Start of picture text --> 16.0%<br>14.0% Single-adult hh with<br>12.0% Hh with 2 ch children<br>10.0%<br>Small cities<br>8.0% Rural<br>6.0% Secondary spec edu<br>4.0%<br>2.0% Minsk<br>0.0%<br>-2.0% 150 200 250 300 350 400<br>-4.0% Hh with 3 and more ch Retiree hh<br>Higher education<br>-6.0%<br>Cash income in 2016<br>Real cash income change 2016-2017<br><!-- End of picture text --> Note: Cash income and change in cash income are measured in real 2014 roubles per capita. Source: Authors’ calculations based on quarterly HBS.

# 3.2. Absolute and moderate poverty

The crisis of 2015‐2016 had a substantial effect on the well‐being of the low‐income population, but it was not accompanied by a corresponding increase in the poverty headcount. The official absolute poverty rate increased slightly only up to 5.9 percent in 2017 from 4.8 percent in 2014. Our calculations based on individual budgets of subsistence minimum (MSB) show that the poverty increase started in the 1<sup>st</sup> quarter of 2015 (from 5.3 percent in 2014), and culminated in the 4<sup>th</sup> quarter of 2016 (7.4 percent). The scale of the poverty increase was rather similar for all social groups vulnerable to poverty risk: households with children, citizens residing in rural areas, the non‐employed, the partly employed, as well as individuals with relatively low levels of education (see Annexes, Table A2). In addition, a substantial poverty risk increase occurred among those who were employed, reflecting the deterioration of the labor market. Social groups that were not affected by the crisis in terms of official poverty rates were the residents of Minsk, persons with high educational attainment, and retirees.

A more notable increase in poverty risk was observed if one considers those who were affected by poverty for at least one quarter within a year. The share of the poverty‐affected population grew from 10.5 percent in 2014 to 13.3 percent in 2017 (Figure 10), as there was a substantial increase in the number of those who went in and out of poverty within a year.

In contrast to official poverty measured by the line set at the level of subsistence minimum, moderate poverty rates, which are based on the line equal to minimum consumption budget (MCB), increased substantially during the same period. The minimum consumption budget, unlike the official poverty line, takes into account not only the physical needs, but also the socio‐economic needs of the population. In the last quarter of 2017, the MCB was 68 percent higher than the effective official poverty rate (329 BYN versus 196 BYN).

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