Russian crisis-hit economy slumped 4.1 percent in third quarter

MOSCOW – Agence France-Presse

The Russian national flag is flown at half-mast on top of the Senate Building in Kremlin on the day of national mourning in Moscow, Russia, Sunday, Nov. 1, 2015. AP Photo

Russia’s economy shrank 4.1 percent in the third quarter this year, official statistics showed on Nov. 12, as a recession caused by low oil prices and Western sanctions over Ukraine continued to take its toll.

The preliminary figures released by state agency Rosstat represent a slight improvement on government forecasts of a 4.3 percent year-on-year fall but still show that Russia’s economy is mired deep in trouble.     

Russia’s government estimates that the economy will shrink by around 3.9 percent in 2015 before recovering slightly by 0.7 percent in 2016.

The World Bank in September predicted the Russian economy would shrink by 3.8 percent in 2015 in its baseline scenario, a far steeper decline than an earlier forecast of a 2.7-percent contraction.

The downturn in 2015 could be as much as 4.3 percent if oil prices continue to drop and average around $50 a barrel over the year, the bank said.    

The World Bank in September ditched its earlier forecast of a gentle recovery with 0.7 percent growth in 2016. It now expects Russian economic output to decline 0.6 percent next year, with a recovery only appearing in 2017 with growth of 1.5 percent.

The poverty rate has climbed to 15.1 percent, representing 21.7 million people, in what the World Bank called a “troubling rise” exacerbated by increasing food prices.     

In some regions, more than 35 percent of the population live in poverty, it said.

The International Monetary Fund estimates that Western sanctions imposed on Moscow over its meddling in Ukraine could cost Russia about nine percent of GDP in the medium-term.