Tags: Russia | russia | economy | crisis | toll

Russian Economy Grinds to a Halt as Crisis Takes Heavy Toll

Monday, 24 Mar 2014 12:56 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Russia's economy is barely growing, inflation is rising fast, and capital is pouring out of the country, the Economy Ministry said on Monday, a sign that international tensions around Ukraine are already inflicting severe economic costs.

In February Russia's gross domestic product eked out growth of just 0.3 percent year-on-year, down from 0.7 percent in January, Russia's Deputy Economy Minister Andrei Klepach said.

Last year the economy grew by just 1.3 percent, far below initial forecasts, but there had been hopes that growth would rebound this year. Instead Russia's economic performance is deteriorating further as the international tensions around Ukraine lead capital to flee Russia.

Klepach said that when seasonal and calendar factors are taken into account, February's 0.3 percent was "not bad" and "better than expected."

But he added that "it's too soon to talk about a turn-around in economic trends, about a recovery from stagnation."

He said that the ministry anticipates GDP growth of "around zero" for the first quarter as a whole. That would make its 2.5 percent growth forecast for 2014 challenging.

"There won't be a recession, but there is a problem of stagnation: it's length and depth. Unfortunately the investment slump is continuing. I'm not ready to say how long it will continue," Klepach said.

 

INFLATION SPIKE

While Russia's economic growth slows, inflation is shooting up. The Economy Ministry expects inflation to reach 6.9-7.0 percent in March, up from 6.2 percent in February.

The sharp rise illustrates how a slumping rouble is feeding into higher import prices, as both Russians and foreigners scramble to get out of rouble investments.

Klepach said that the Economy Ministry forecasts the net capital outflow during the first quarter at $65-70 billion - and "closer to $70 billion".

That compares with an outflow of $62.7 billion during the whole of 2013.

He said that Russia's economic indicators have been deteriorating, even though western sanctions against Russia have so far had only a minor economic impact, because cool relations between Russia and the West damage investor confidence.

"We considered in the forecast how the general deterioration of our relations with developed countries and world markets is having an influence," he said.

"Sanctions so far don't have a significant economic character, but in itself a worsening of relations is a significantly negative factor for economic growth and correspondingly influences the capital outflow."


© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Rick Perry: No Congressional Recess Until Immigration Bill Passed

Friday, 01 Aug 2014 10:03 AM

Texas GOP Gov. Rick Perry said Thursday that Congress has a responsibility to stay in session until it passes an emergen . . .

Rasmussen Poll: Obama Policies Encourage Illegal Immigration

Friday, 01 Aug 2014 09:10 AM

A majority of Americans, 53 percent, who say they are likely to vote in the fall midterms say the Obama administration i . . .

Border Bill Failure Also Stalls 'Iron Dome' Funding in Senate

Thursday, 31 Jul 2014 20:42 PM

The failure of the U.S. Senate's border security funding bill on Thursday also delayed at least until September $225 mil . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved