×

Putin's 'United Russia' set to win elections despite public anger

Russia's political scene is being closely watched this weekend as President Vladimir Putin's party is tested in parliamentary and regional elections.

Despite the declining popularity of Putin's United Russia party – although not of Putin himself – it is still expected to win the September 18 elections to the lower chamber of parliament (the State Duma) and gain an absolute majority of mandates, analysts predict.

Voting got under way Saturday evening on the Chukotka Peninsula and polls will close in Kaliningrad at around 7.00 p.m. London time on Sunday, according to Reuters.

"Some newcomers are likely to enter parliament, but the chamber will continue to be dominated by pro-Kremlin parties," Otilia Dhand, senior vice president of risk consultancy Teneo Intelligence, said in a note earlier this week.

"Significant personal changes to the top economic team are also unlikely. While this will produce policy continuity, no material improvement in the outlook for structural reforms is expected after the vote," Dhand added.

The analyst noted that the expected the win for United Russia (UR) will come despite a slow decline in recent polls, with the party currently attracting 39 to 41 percent of decided voters, down from 44 percent to 47 percent a month ago and it being reliant on its leader Putin for retaining popular support.


Workmen put up a giant poster of Russian Prime Minister Vladimir Putin advertising the dominant United Russia party.
ANDREI SMIRNOV/AFP/GettyImages
Workmen put up a giant poster of Russian Prime Minister Vladimir Putin advertising the dominant United Russia party.

"The party's fall-back strategy to put forward President Vladimir Putin, whose personal ratings significantly outperform the party's, seems to have worked only partially as economic realities bite and voters blame the UR," Dhand said. However, he noted that "none of the other parties that are likely to enter the parliament seem to be picking up UR's lost votes in large numbers."

For instance, the Liberal Democratic party (LDPR) is polling at 9-12 percent, while the Communist Party (CPFR) is at 8-10 percent, and the leftist Just Russia party (JR) at 5-6 percent, Dhand noted, adding that it should be borne in mind that UR also tends to underperform in pre-election polls.

Let them eat bread

The elections this weekend are an important precursor to a national election in 2018. The elections come amid a challenging economic environment and discontent among ordinary Russians about the stubbornly high price of basic goods.

On Friday, Russia's central bank cut interest rates, as expected, by 50 basis points to 10 percent in a bid to stimulate the economy through gradual rate-cutting. The Russian economy has been hit by sanctions levied after Russia's annexation of Crimea and involvement in a pro-Russian uprising in Ukraine, as well as the drop in the oil price. Poverty has increased.

However, inflation also remains high, potentially putting the central bank in a quandary. It hopes to lower the rate of inflation to 4 percent by 2017, but as of August it stood at 6.9 percent.

Eurasia Group's Russia analysts Jason Bush, Zachary Witlin and Alexander Kliment said in a note on Thursday that a "inflation-targeting strategy harmonizes with Putin's political goal of decisively winning the 2018 presidential election."

"While industrial lobbies want lower interest rates, most ordinary Russians care more about bread-and-butter issues such as the price of bread and butter. According to one recent poll by the Levada center, an independent polling agency, the government's failure to address rising prices is the number one concern for citizens; fully 42 percent of those polled say it's their primary grievance. In contrast, just 25 percent hold the government responsible for 'failing to deal with the economic crisis,'" the analysts said.

On a more positive note, the Russian economy is seen growing again in 2017. Plus, on Friday, S&P Global Ratings upgraded its outlook on the Russia's credit rating to "stable" from "negative."

"External risks to Russia have abated to a significant extent, while the country's economy continues to adjust to the dual shocks of a lower oil price environment and sanctions imposed by the EU and the U.S.," S&P said in a report on the revision.

—With contribution from CNBC's Katy Barnato. Follow CNBC International on Twitter and Facebook.